I imported Mitch's docx file into RH7 and got the same
result.
I then saved the docx file as a web page filtered as that
gets Word to save the images to a sub-folder to the htm file. The
image was saved as a gif. I then ran a simple test to confirm that
Word saves images as their original format so Mitch's source image
was a gif.
I took a screenshot of the image and saved it as a jpg. That
was then inserted into a docx file which then got saved as a web
page filtered. That confirmed the image was still recognised by
Word as a jpg.
I imported that document into RH and none of the grainy
appearance.
So the problem seems to be that the source image was a gif.
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