A family of Microsoft relational database management systems designed for ease of use.
I have exactly the same problem. One day out of the blue, when I opened the document I was working on which had photos on it, it no longer displayed them. Instead it displays a rectangle with 2 diagonal lines from corner to corner forming an X (not a red X or anything like that).
If I start a new blank document and try to insert a picture I get the message "Import of image failed: 'Chrysanthemum.jpg'" (in this case I used one of the sample JPeg pictures that come with Windows 7, but it happens with all formats) in a small dialog window.
I however have a new development on this. I discovered that the problem is with the user account, and not with the installation of the software. That is, if I create a new Windows user, and try the same operation on a blank document, it works fine. To verify this, I uninstalled all Office products from my computer, and re-installed them, and my account still had the problem, but other accounts were fine.
I have tried removing all AppData, temp files, or registry items related to Office, but have had no success so far.