Policies: Windows Picture And Fax Viewer

We are running WinXP SP2 and Office 2003.
We have group policies in place.
Double clicking on a BMP file produces no errors.
Right click/Open With…/Windows Picture And Fax Viewer produces “operation has been cancelled due to restrictions” error.
Same error occurs when double clicking BMP attachment in an email in Outlook 2003.

What is WinXP trying to do differently when opening with Open With or Outlook to produce an error?