Sometimes, more often that I like,
when I open an .jpg image from my HD
into IE (by double click on image file)
it simply mades my mouse pointer runs mad...
sounds like an out of memory problem to me...

restart your computer, and click on the jpeg to see if it works differently. if it does, start in safe mode, and do the same thing.

what OS are you using? how much free memory do you have?