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A valid image file, with a valid world file, displays when placed into a view as a theme, but the coordinates on the tool bar seem to be the pixel coordinates of the image instead of the georeferenced coordinates from the world file.
This can be caused by various factors.
1. File name:
The image file and its world file must have the same name, except for extension. The world file extension's first two letters must be the first and third letter from the image file extension, plus a 'w' as the third letter. For example: 'myimage.tif' and 'myimage.tfw', 'otherimg.bil' and 'otherimg.blw'. If the file was created in UNIX ArcInfo, it may have a four-character extensions, in such case you need to shorten it to three.
2. File location and structure:
The image file and its world file must be in the same directory path. The image file and world file names and path must be 8.3 compliant.
3. File contents:
The world file must consist of 6 separate lines of text, each line is a number.
The first and fourth line represents the width and height of a pixel, the first must be positive, the fourth must be negative.
The second and third lines are the rotation terms of the image. These should both be zero. If they are not zero, ArcView will still work with the georeferenced image, but the image will probably slide around as you pan and zoom the view.
The fifth and sixth lines are the X and Y real-world coordinates of the center of the top-left pixel.
4. File structure:
The world file must be plain ASCII text with no embedded word processor codes. You can check this by opening the file up in a text editor.