Hi:
HTML works by creating an <IMG> tag to point to the image file to be loaded. This, generally, allows the HTML content to load and then, as the browser is ready, it can get the images from the web server. You've probably seen image heavy web pages that have text appear first and then images pop up after the text on the page has loaded. This is the whole point of an <IMG> tag. It seems as though the person who requested HTML, but no image files might have had another format in mind?
The good news is that for RTF and PDF destinations, the image is converted to an "internal" RTF or PDF format. So, in a sense, the image from SAS is embedded in the document. If you used RTF or PDF instead of HTML, you would not have to worry about a separate image file. In this case, PDF might be the safest file type to create and send, as almost everybody with a web browser also has a PDF viewer like Acrobat Reader.
cynthia