Solution: I just upgraded to the latest version and the image problem fixed itself.
I don’t know how I missed the upgrade but I did.
All images are behaving as the should now and I have installed Dataview, the Minimal theme and Quick Add and now I am really liking Obsidian. This gives me a good amount of control over my docs while still keeping them simple which is why I use markdown in the first place.
Thanks to the @WhiteNoise in this post for pointing out the obvious (install the latest version): Do your images display on a windows redirected system?