Hi Jorg,
Thank you for your answer. Your suggesting was not the problem (I spelled it wrong in the forum but not in Moodle). I have uploaded a complete web site structure with graphics and all. When I use the import function in the book the links to the graphics are kept as a relative src link (the html source statement in my case is Screenshots/image.jpg). Instructions in the book manual state that all links will converted to absolute src statements. Somehow that is not happening during the import with text and graphics).
However, if I go into edit mode of that particular page that should have a graphic and alter the src statement to a absolute link (in my case http://www.tl21.org/hobartcollege/file.php/3/Instructions/Screenshots/image.jpg)
By the way the text html file resides in the directory Instructions so when hence the relative src link statement to Screenshots/image.jpg But the book import functions does not seem to convert those src statements for graphics to the absolute path needed for the book. Is it a bug or I am doing something wrong?