well that garbage that shows up is actually the image file, that's what the code looks like. it knows it's a jpeg/jfif, but because the extension is either incorrect or not present, windows doesn't know how to open it.
like bob mentioned, rename the file to have the proper extension.
to make sure that the extension is correct, you have to go to the folder options > view tab> and make sure "hide extensions..." is unmarked. that way you can be sure that the last 3 letters after the dot is being changed. then the folder preview should show it as a jpg.
for example:
file1 (rename to) file1.jpg will let windows know it's a jpg.
or file1.XXX (what ever it may say, rename to) file1.jpg
anyway, without a screenshot or something of what the email view looks like or a screen shot of the folder it's it, that's about all i can say. btw, did you try downloading the images with other browsers? if opera or ie can't download it correct either, then yahoo screwed something up.