It sounds like your Outlook installation is corrupt.
Have you tried uninstalling and reinstalling Outlook?
I feel your pain.
I know of no solution.
“This issue occurs when the BlockHTTPimages registry value is set to 1 and the images in the email message have a source that points to a URL.”
If duct tape can’t fix it, I’m out of ideas!
Right click the URL or image icon that shows and copy the link. Then paste it into a browser address bar.
MS has an Outlook Repair function. Search for that and see if that works.
Seriously, check for malware, viruses, and other corruption on your computer. That is a possible cause; else the images themselves are corrupt, your emails bad.
Try the browser version of Outlook or the installed version of Office 365 Outlook. I've been using Microsoft products since they first came out, including especially Outlook. I have never seen problems like you are reporting and if you've done a new, clean setup, that's likely not the problem.
Another possible culprit, what anti-virus software are you using? These can be very, very intrusive, to the point of blocking all inbound content. Check the settings, maybe turn it off as a test.
“The Revolution will not be televised!”
Gil Scott Heron
This will probably work:
Go to FILE menu, then OPTIONS (probably toward the bottom).
Then choose “Trust Center.”
Then go to “Automatic Download”
Then you will see checkboxes for whether the pictures display.
Uncheck the “Do not download” (etc) checkbox or whatever is showing there.
It is not considered very secure to display pictures because they can track you, and it is another route to hack you. I intentionally do NOT have pictures showing in e-mails. So yours is set right probably. If your outlook is controlled by your organization (like work) then this setting might not be changeable.
If you leave it to not show images, there is probably a banner or link of button at the top of individual messages that will show images in that message.
You will also have to show the image in HTML and not in TEXT of the images will not show (unless they are attachments).
You also can probably right-click the message and there might be a menu with options to show in HTML and/or show images.
Hope this helps.
Happy New Year
And I think I did not read your message fully.
I cannot explain the MESSAGE you are getting, but check those things first since the other e-mail clients are working.
What I offered above might not work actually with that message appearing, it could be something else, but look at that first.
Sorry if you already tried that but I could not tell if you had already.
Maybe your security software is interfering? Blocking what it thinks is harmful?
I use McAfee, which is customized for Windows and Edge.
Second thought...
I get a banner text across the top of my incoming Outlook emails that asks me if I want to open the entire email, which includes the images.
I click on the banner, then I click a response, and the entire email and images appear.
Ditch the one that's not working.