as stated earlier i believe this answer was discussed in forum many months
ago and was answered similar to this
the following quoted from pcworld  october 2005 issue page 39


05:39 9/20/2005
IE Save Problems
The Hassle: I used to be able to save images from Web pages as .jpg files
using Internet Explorer. But now I find that I can save files only in .bmp
format. What's going on?

The Fix: IE has a long-standing bug. To see if you have it, go here,
right-click any portion of the image, select Save Picture As, click the
arrow at the right end of the 'Save as type' drop-down list box, and note
the file choices. If you're limited to .bmp files, IE's cache may be full or
it may contain a corrupted file. Click Cancel to close the Save Picture
dialog box. Then delete the browser's temporary cache by selecting Tools,
Internet Options, Delete Files, OK. Better yet, use ButtUglySoftware's
CleanCache 3, a freebie that lets you delete other IE files, too. Either
way, exit IE, log out of Windows, log back in, and run IE again.

No go? Here are two workarounds:

Workaround 1: Select Tools, Internet Options, Settings, View Objects, and
look for programs listed as 'Unknown' or 'Damaged' in the Status column. If
you find one, right-click it, choose Remove, and click Yes to confirm.
Repeat the process for any others. Still busted? Delete all of the
downloaded program files.

Workaround 2: Select Tools, Internet Options, Advanced, scroll to the
Security section, click Do not save encrypted pages to disk to clear its
check box, and click OK. In IE, select View, Refresh or press <F5>.


if you have done the above and it syill does not work you might be SOL
ken

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