At least readable by Apache. Can you browse directly to the image location in your browser?
So the file doesn't exist on the server. Are you sure you migrated all of the files correctly? There's only one conclusion to draw, here.
The file definately exists on the server. I can download it manually via ftp and view it on my computer. This is why im so confused. I'm more than happy to give you ftp access/login details if you would wanted to take a look.
Ok sorry for bugging you with this UncleCheese, I just found out what was going on. There is a .htaccess file in my /assets directory that had one line in it "php_flag engine off" which when removed made my images work again. Not really sure what was going on, but crisis averted!
Thanks for your time mate