I am no expert, but I have had this happen in the past. First, you can change the extension before the download begins by adding the proper extension in the download manager. You will be prompted regarding where you want the file saved and what type of file it is. You can just add the proper extension. Somehow Netscape must be recognizing the files you are downloading as image files.
You can also wait until the file is saved and change the extension in Windows Explorer. Just click on the file (don't double-click or the file with open)until the letters turn blue or you get a cursor, then make the appropriate change. Or, you can right-click on the name and choose "rename" to do the same thing.
Hope this helps.
Download Manager in Netscape 7.1 adds a ".jpg" extension to my download files. I have searched Netscape's site and can't find a way to turn Download manager off and I don't know what program is adding the jpg extension.