Dear pbwbart,
1x1.gif is a blank image, it is a placeholder.
You can open file "CuteSoft_Client\CuteEditor\Dialogs\InsertImage.aspx", you will find the following line:
<div id="divpreview">
<img id="img_demo" alt="" src="../Load.ashx?type=image&file=1x1.gif" />
</div>
Once you choose one image(10n2.jpg), these html code will be changed to:
<div id="divpreview">
<img hspace="0" height="85" align="" width="135" vspace="0" src="http://cutesoft.net/uploads/10n2.jpg?time=1302701489012" alt="" id="img_demo">
</div>
Thank you for asking