Thanks for the quick response...
The following is the log message in the W3SVC1 log directory.
2008-08-12 06:38:54 ::1 GET /new711/images/infor-logo.GIF - 80 - ::1 Mozilla/4.0+(compatible;+MSIE+7.0;+Windows+NT+6.0;+SLCC1;+.NET+CLR+2.0.50727) 500 19 87 156 .
The MIME type settings are there as we have a gif/jpeg images only...
Even we are not able to open the image through IIS, when we are trying to access through IIS we are getting "HTTP Error 500.19 - Internal Server Error" this error message.
With IIS5/6 we were able to open the images with IIS URL as well...
I am not sure what we missed out or do we need any special configuration to wrok with IIS7.0.