Ah I think I see the problem here. After you pointed to condition B I noticed that my html files are filename.htm, no 'l'

I changed the scope line to read:

 text.html, text.htm

with no luck.

Is there a way to assign a wider scope and I might suggest that be default the html behaviors should work on both .html and .htm 

Eric

This should work granted that a) you have the HTML drag command for images, b) you drop the image file in something which has scope text.html, and c) the image dragged has one of these (case sensitive) extensions: png, PNG, jpeg, JPEG, jpg, JPG, gif, GIF.