Before reading the below, please note that it is not an “image” problem.
In my thirtybees local environment If I turn Friendly URL’s ON, I get “page not found” after clicking anything from the home page. A side effect is that “new products” images and “featured category” images are camera icons.
If I turn friendly URLs OFF then everything works fine.
Below is the code contained in my Virtualhost apache2 configuration and the .htaccess with URL rewrites (friendly URLs) set to "ON". I had to attach a plain text file because when I entered the code directly in this message, there was some strange formatting.
01511917536618Virtualhost-apache2-conf-and-htaccess-with-rewriteON.txt