Sharepoint incoming email

When you send email to a sharepoint library it will not show anything but the attachment.  Are you sending an attachment with your  test email or just text in the body?  Your form will need to be sent to the email address as an attachment for this to work for you if everything else has been ruled out.

Check the form library settings --> Incoming E-mail settings.
Does it allows mails from all users or only users with permissiosn to that form library. the person who is sending the mail should have permissions if it allows only from users with permissions.
Also check the settings how you are allowing mail to sit in the library.
Hope this helps...

I have setup the incoming setting of the site to allow emails, and I clicked to reveive from any sender.  I am sending to the email address of the library and I am sending attachments.  I am sending it from an address with full control to the library.

Update:  I added the local accounts to the library and now it will create the folder based on sender (option I set up) but no attachment.  Also, I selected to save the original email and that is not there either.

Sorry I mis-spoke above.  Turns out you can configure the email settings to save the email as well as attachments.  We ran a test over the weekend.  I think your issue is something to do with the Farm level services rather than the library settings.  Mail settings are very sensitive & must be set up in a particular order.  If you don't enable one service before the other, it won't work properly.  I would suggest stopping the mail service & following the step by step instructions from this post:
http://technet.microsoft.com/en-us/library/cc287879.aspx
If you go through each step & double check everything, you should find something that was done out of order or maybe something as simple as a typo somewhere that needs corrected.  I hope this helps point you in the right direction.

Thanks for this, I viewed this article prior to my post.  Everything seems to be setup this way and Sharepoint must be receiving the email because it will make the folder in the library.  I watch the email come into the drop folder and disappear.  Seconds after it disappears, I have a new folder in the sharepoint library (empty).  Almost seems like there is something stopping the publish of the email itself but I have not seen any errors in event viewer plus I added all the local accounts to the library which is what the timer service is using.

Check your library settings under version settings to make sure items don't have to be checked out before they can be edited & make sure items don't require approval.  I would then go to "Manage Checked out files" just to make sure there isn't something in there.  This is all I can think of if the rest of the settings are correct and the services have been started in the proper order.

I checked those settings and versioning is off and it is not required to be checked out.  It does not require approval and there is nothing in the managed checked out files.  I also opsted this on a Microsoft board so I'll see what they say.  I also made another library just to test and same results.  I am only running a single sharepoint server if that matters at all.

Glad you found the culprit.  Hopefully your discovery will help others that have this issue down the road.