Whats wrong with this ..aaarrrggghhh

The <%# %> tags are for databinding, not inline asp, so whatever is inbetween those tags must resolve to a value.
If ... Then is not an Expression that can resolve to a value hence the error, Expression Expected. There are several ways to get around this, one way is to use IIf. so your code would look like:

Code:

<asp:TemplateColumn HeaderText="ack" Visible="True"> 

<ItemTemplate> 

<%# IIf(DataSet1.FieldValue("CALLACK", Container) = True,  _

"<img align='middle' src='image1.gif'>",  _

"<img align='middle' src='iamge2.gif'>" ) %> 

</ItemTemplate> 

</asp:TemplateColumn>

I didn't test out this code so i might have missed a quote here or there but you should be able to get the picture.

Here's a different way I did it, like i said there are many ways to do it, just depends on what works for ya:

VB Code:

<%@ Import Namespace="System.Data" %>
<%@ Import Namespace="System.Data.SqlClient" %>
<script language="vb" runat="server">
Sub Page_Load(ByVal sender As Object , ByVal e As System.EventArgs)
    If Not Page.IsPostBack Then
        bindGrid()
    End If
End Sub 
 
Sub bindGrid()
    Dim connString As String = "user id=sa;password=sa;database=Scratch;server=DeathAngel;"
    Dim cn As New SqlConnection(connString)
    Dim cmdText As String = "Select * From Customer"
    Dim cmd As New SqlCommand ( cmdText , cn )
    cmd.Connection.Open()
    gridCustomer.DataSource = cmd.ExecuteReader(CommandBehavior.CloseConnection)
    gridCustomer.DataBind()
End Sub
 
Function DrawCallBackImage(ByVal CallBack As object) As String
    Dim IsCallBack As Boolean
    Dim ImageFileName As String 
    IsCallBack = CType(CallBack , Boolean)
    If IsCallBack Then
        ImageFileName = "Image1.gif"
    Else
        ImageFileName = "Image2.gif"
    End If
    Return "<img border=""0"" src=""" & ImageFileName & """/>"
End Function 
</script>
<html>
    <body>
        <form id="DataSetDecision" runat="server">
            <asp:DataGrid
                ID="gridCustomer"
                Runat="server"
                AutoGenerateColumns="False">
                <Columns>
                    <asp:BoundColumn
                        DataField="CustomerId"
                        HeaderText="Cust ID"/>
                    <asp:TemplateColumn
                        HeaderText="CallBack">
                        <ItemTemplate>
                            <%# DrawCallBackImage ( Container.DataItem ( "CallBack" ) ) %>
                        </ItemTemplate>
                    </asp:TemplateColumn>
                </Columns>
            </asp:DataGrid>
        </form>
    </body>
</html>