My Outlook won't display embedded images - I just get a red X. What to do?

This is an old problem that has haunted me and many others for a long time.

What happens is that in Outlook 2003 / 2007, emails you receive do not display any embedded images. Instead you see a red X at top left.
Also, emails that you send may show embedded images before you send them, but once in your Sent Items
the images disappear.

I have adjusted security settings until I am magenta, cyan, mauve, and occasionally a combination of puce and eggplant in the face (ya, those are real colours...:)), both in Internet Explorer and in Outlook, but to no avail.

Finally yesterday I came across a SERIOUSLY useful piece of information in the fight against non-displaying images in Outlook... and here it is:

http://www.howto-outlook.com/products/outlooktools.htm

I won't reproduce everything at the link above, except to say that this tool allows you to clear the Outlook Cache folder - a folder that most people don't even know exists, and which is a bit of a mission to access normally.
The Outlook Cache folder is used to store temporary items such as attachments and embedded images, and over time if it fills up, this can cause problems displaying embedded images in your mail.
Hence the need for something like this:

It's pretty straight forward - open up OutlookTools and hit the "Clear Folder" button - this cleans out the Outlook Cache folder and your images should now show up as they once did :)