How do I save documents with illustrations?

I can insert picture as file, selecting a jpeg, png etc and it shows in a frame in a .doc file. As long as I keep the file open, I can see the picture, print the page etc. but if I save the file and come back to it later, the picture disappears and an empty frame is roughly where i left the picture. I have to re-insert the .png every time I open the file and if I send the .doc to anyone, they have to do the same.

Also I do have graphics set as visible and I am not inserting the picture as a link.

FWIW, I am having what I believe is a related problem. A page background watermark graphic I add completely “disappears” when I save the document as "MS Word 2007/2010 XML .docx". Very, very irritating as the people I must eventually distribute the document to all use MS Word.

It may be that you are experiencing the problem described in bugs fdo#67318, fdo#49184, or fdo#40540. All appear to indicate a problem with losing objects (frames or graphics) placed within a frame when saving to the DOC or DOCX file formats.