I always get the output: File not found

Version of Drupal?
Drupal 6.10

Process I Used for the Inline module?
- Uploaded Inline module folder to Modules directory
- Enabled Inline
- Updated Database
- Ran Cron
- Upload, ImageCache, ImageCache support were already enabled since Ubercart is also dependent on these modules.
- I went to Content Type Blog and added existing imagecache field
- Then configured Inline module
+ Link to images: Display image only
+ Teaser preset: blog
+ Full preset: blog
- Enabled "inline filter" refered to the readme file located here: http://cvs.drupal.org/viewvc.py/drupal/contributions/modules/inline/READ... for both filtered html and full html
- Then I headed over to the imagecache setting and added scaling to 20%
- Added the CSS stylesheet snippet to my theme css file (as given from the Read Me url I refered to earlier)
- Finally I created a blog page
- Uploaded an image
- In the content area of my blog i entered [inline:1] [inline:file.jpg] [inline:#1]
- FYI: the file uploaded is named file.jpg
- When viewing the blog it outputs: Blog Content NOT FOUND: file.jpg
- Upon logging into ftp and browsing the imagecache directory it shows the image uploaded successfully

Installed Module
CCK
Blog
Blog API
Color
Contact
Database Logging
Forum
Help
Menu
Profile
Search
Statistics
Syslog
Taxonomy
Throttle
Tracker
Update Status
Upload
ImageCache
Inline
Iconizer
Poormanscron
Thickbox
Token
Ubercart
Views

Can anyone let me know what I'm doing wrong?