Images not showing from files directory -- really weird

Hi all,
I am having a very weird issue. I migrated a site from a local host to a bluehost subdomain. Everything went well except my images were no longer showing because of a different file location on blue host (i.e. the images were no longer in sites/default/files). I wasn't sure how to change the database tables to reflect the new path so I just reuploaded everything and the site looked fine for me.

I was showing someone the site who was logged in from their own computer at another location. They told me they could not see any images when using the browser explorer. I gave them full rights to the site but they still couldn't (I could at the time). When they downloaded firefox, all images appeared as normal.

Then this morning, I went to do work on the site and some images stopped appearing in both firefox and explorer. The images that won't display are all in the "files" directory at the same level as my themes and modules directories. However, all of my imagecache images work fine though they are in folders within the "files" directory.

I've testing the following with no luck:
I deleted and recreated all images that were not showing.
I enabled 777 permissions on all the files that were not showing AND the files directory.
I made sure that full html was enabled on the pages that are displaying the images.
I also moved the images to a new folder inside the files directory (i.e. to files/images)

I think its a folder issue because if I move the images to my themes directory and call the images from there, they show up no problem. Also, all of my imagecache images are being called through a "system" folder that doesn't exist, (i.e. /system/files/imagecache/product_full/... -- the actual directory is /sites/mysite/files/imagecache/product_full/...)

Please help, I have absolutely no idea why this could be occurring and I am not familiar with playing around with the .htaccess file or the settings.php file.

Peter