How to Insert a Picture or Image inline in Outlook instead as Attachment?
It is easy to attach a file in Outlook 2010 or 2007 as all that you have to do is just drag and drop to the new email window. But sometimes it is required to insert or embed a picture inline so that it is viewable within the window when the email is viewed.
So how to insert a picture or image inline in Outlook?
First the format text has to be in HTML format. In Outlook 2010, go to Format Text and choose HTML if it is not already chosen.

Do not use the attach item or attach file links but go to to Insert tab and click on Picture. Browse and insert a picture.

In Office 2010, you can also format the picture. Click on the picture and and click on Format tab under Picture Tools.

When you send mails to other Outlook or Gmail or Yahoo, it will appear inline within any contents of the mail.

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