It would appear that your document is in .doc format. In a .docx document, images are not displayed in Draft view under any circumstances, but in .doc documents, inline images (that is, those with text wrapping set to In Line with Text) and images in frames
are displayed in Draft view. Images with any other wrapping style and images in text boxes (or text boxes containing text, for that matter) are not displayed in Draft view. This behavior is unchanged from earlier versions (you'd see the same result in Word
2003).
In .doc-format documents, square black handles indicate an inline image; round white handles indicate a "wrapped" graphic.
I'm not sure what you mean by "it would appear" to be in .doc format. Did you look at the document I uploaded? The file extension is ".docx". And just to be sure, I saved it again as a Word (not Word 97-2003) document. And it behaves exactly the same way. As
a second check, I checked the document properties, which say that it is a "Microsoft Office Word document". As a third check, I saved it as a Word 97-2003 (.doc) document and checked the properties of that document. Sure enough, it says that that one is a
"Microsoft Office Word 97-2003 document". I have uploaded the .doc version to the same DropBox folder.
So it "appears" that my document is not a ".doc" document and images are displayed in draft layout under some circumstances.
If I right-click the second image, the one with the round handles (Actually, the corner handles are round. The side handles are square and both are "white" or hollow.), then select the Text Wrapping option, it shows that it is set to "In Line with Text", not
"Wrapped".
If I right-click the first image, the one with the square handles (which look more grey than black to me), there is no Text Wrapping option. There is a Format Picture option, which pops up a panel with several tabs. one of which is Layout. Clicking that tab,
I get a few Wrapping Style options, but not as many as with the second image. This image is also set to "In Line with Text".