Gah! I've found that WPF's BitmapImage is quite finicky about the kind of JPEG files it will load.
In my first WPF project (a port of a WinForms picture viewer), I needed to create a TreeView with icons on each node. It doesn't take long to realize that the WPF TreeView doesn't have this functionality built-in anymore.
I've started migrating to Visual Studio 2008 and .NET 3.5 for my home projects, for whatever that's worth. (We aren't allowed to use it at work.) Nothing in my projects actually require .NET 3.5 features, mind you, so it's not that great of an experiment, but hey, it's a start.