Setting it to yes breaks the image links. As soon as I do this the image url changes to say /bmz_cache/c/testjpg.image.100x80.jpg but if you check the folder the image is not there. If I then go to edit the image details for that product in IH Admin the script creates the image and all is OK.

Somehow only the Admin side is creating the cache but the catalogue side doesn't.

The other strange thing is if I then go to the additional images tab (I'm running TPP) the thumbnail image is broken but if I click to view it will open the larger image but in the original location. This is with IH enabled.

In my test store I have the same setup and all is OK.

I can show you it all in action but as it is a live store I can't leave IH enabled at the moment.