I don't have an image subfolder, and my stuff works fine.
all i can think of right now:
- Make sure the file is called eq2.ini and not eq2.txt or eq2.ini.txt (in xp open my computer, click on the tools menu, click folder options, click the view tab, and make sure "hide extentions for known file types" is UNCHECKED)
- (a long shot, but..) \Games\EverQuest II\ is not the default installation path, maybe there's a bug with that (especially since you say copying the files to the default folder didn't work).... see if C:\Program Files\Sony\EverQuest II exists on your computer =)
Excellent directory name though!