Some people who have upgraded from Internet Explorer 6 to Internet Explorer 7, (whether they upgraded manually or whether their Windows Automatic Updates upgraded it), have reported problems afterwards, and not just with browsing the internet. Microsoft integrated IE and Windows Explorer some years ago into the Windows Operating System, meaning it is not easy to remove them, without pulling the OS apart, and IE7 has seemed a bit buggy to some.
However if yours is a new computer or new system you may have had IE7 from the start, and that might be difficult to downgrade to IE6. I have not heard of IE7 corrupting images, but that might be an avenue to explore if all else fails.
If you have tried an image recovery utility and it has failed, then I am not sure what else can be done to recover those images. You could try something like Irfanview from http://www.irfanview.com/ , a simple image display and editor that has many features. I haven't used it myself but many members recommend it. Possibly it will be able to open these corrupted image files, or at least browse the folders they are in. Then you can try re-saving them, or if that fails, deleting them.
This is the problem though. If you cannot open the folders to see inside, and to delete these corrupted files, using Windows Explorer or Irfanview, then they are stuck there, and that is likely to cause continuing problems trying to attach images into emails or Word.
However, if those directories/folders can be set not to open in Thumbnail mode, then Windows Explorer should at least be able to list all the files and from there you can attempt to open each individual file and if it fails, delete the file. That would be simple to achieve if those folders are not inside the My Documents/My Pictures folders. But if they are, then the default view is Thumbnail view.
To change all folders' view from Thumbnail to "List", or "Details", use Windows Explorer and select any folder, make sure it lists files in either List or Details, then goto Tools > Folder options, then the View tab, and click the option that says, "Apply, {Folder views} to All Folders". This will change all views to that one for all folders except the system ones like My Pictures. Then you should be able to open those folders for further investigation.
If those corrupted files are in My Pictures then it is more difficult. I would try rebooting into Safe Mode and opening the folders from there. In Safe Mode many of the graphical features of full Windows are turned off, and so you may then be able to access those folders.
If you can, then you can at least cut and paste them out of My Pictures and locate them eslewhere where you can at least open the folders in Normal full Windows mode. Or you can delete them.
If all that fails, then you still have Rick's idea.
Why do images become corrupted? I don't know. But it could be signs of various things, like virus damage, or a hard disk with errors or badly fragmented, or it could be just a bad batch.
Mark