Thanks - I am not technical but basically what I think is that, when you upload an image its URl is something like
http://www.XXXXXXX.co.uk/draftfile.php/13/user/draft/724950045/thumb_sunflowers.jpg
but once you have saved it and displayed it (in your case with an X) then if you right-click and look at its URL it should have changed to
http://www.XXXXXX.co.uk/pluginfile.php/560/mod_label/intro/thumb_sunflowers.jpg
So basically, if yours is still showing the draftfile link once it has been saved and displayed, then there is a problem. I don't know the resolution but there have been several forum posts and tracker issues on this - I recall one with images in the Lesson module doing similar. Either do a search in the forums/tracker for draftfile.php or else maybe someone with experience of journal 2 will come along with other suggestions. (I haven't installed it so can't test it out) Did you have the journal in 1.9 and did you follow the correct procedures for upgrading to 2.0?