Using Classic Outlook on Windows for personal email, calendar, and contact management
Yep, so frustrating. BUT there's a workaround for it. Whilst the image is NOT highlighted, click and drag the mouse from outside to inside of the image (a bit fast) and the corner sizing handles will appear. Just like you're selecting a chunk of text.
Update: Just discovered that double-clicking outside the image somewhere in the text body also brings up the corner sizing handles. Easier :)
This doesn't work. My pictures are inline with text. When I drag from outside the picture to the inside, it selects the text outside the picture instead of selecting the picture and showing the resize handles. It's currently impossible to resize my sometimes humongous pictures.