Open the JPEG image using Windows Picture and Fax Viewer and Save As .tiff image. This will display in ArcGIS9.2User mentioned that if he opens this JPEG in AdobePhotoshop and then Save As JPEG then ArcGIS9.2 reads correctly.Solution for JPEG with "Progressive' JPEG; Compression:Open the JPEG in a third-party graphics application and save to a new file or new format without the option for 'Progressive' compression.