Steven Zahm@ Mark
I’m sorry, but I think you’re going to have to reach out to the Enfold support on this one.
I tracked down the javascript causing this. It is the shortcodes.js for Enfold.
http://kolokube.co.uk/wp/wp-content/themes/enfold/js/shortcodes.js?ver=3
If I block this file from running, the images display just fine. There are doing a few things with images in this file so it is hard to pin down exactly the issue. But it’s a probably safe assumption that is the code in this file should only affect their shortcodes and that there must be a bug which is causing it to also effect the category images.
If they are unable to help, I’ll need a copy of the theme so I can go thru their file one line at a time to figure out why the category images are being targeted. Then I might be able to add code to prevent it.