Scenario
In the Outlook desktop client, you notice that when an email is saved as a draft an image in the signature is now shown as an attachment, not in the body of the email.
This occurs each time the email is saved to draft until all signature images are displayed as attachments.
Information
This issue can also in rare cases affect emails that are not saved as draft.
Reason
Embedded images inserted into an email signature are attachments, but Outlook is designed to display these attachments as in-line images in the body of the email.
An issue exists in Outlook that affects email saved to the drafts folder, where the image is no longer displayed in-line and is displayed as a normal attachment. This issue has been reported to Microsoft and confirmed as a bug.
Microsoft have confirmed that this bug will be fixed with an upcoming (as of August 2023) update to Office 365, Symprex are tracking all customers that report this problem and will update when the exact build version is released by Microsoft.
Solution
It is possible to work around this issue by enabling hotlinking of images in your signatures - additional information on this is linked below. This resolves the issue as the image is no longer an attachment to the email.
If you would like to enable this feature for your tenant, please email the Signature 365 Support team.
Using hotlinked vs embedded images in Outlook : Signature 365 Help Center
Configuring your Signature 365 Tenant to use hotlinked images : Signature 365 Help Center