I have several customers having this issue.... well they are all likely seeing the problem.
New outlook messages since about 2 weeks ago no longer download images.
I can go in and unblock this function and it still doesn't help.
I go into Trust Center and I turned off the check box for Don't download pictures automatically in HTML email messages or RSS items. But the images in the emails don't download still.
Not sure if there is another location for the settings to allow images.
Clients are starting to email me about it. Their gmail accounts or other that use outlook are starting to have their images blocked too. I see many emails asking me to click a link to see the email in HTML format.
It all shows up there in that format.