Breaks image if not in default file directory

If an image is used which is local to Drupal, but not in the default files directory (in particular is in the current theme directory) then the resized link is corrupted.

I put the following in a block in the page header <p><img alt="" src="/sites/all/themes/lac_D7/images/buynow.png" /> xxxx</p>
Works fine, though something (Resize Filter?) has added height and width attributes when sent to the browser.

If I add different size attributes in the source: <p><img alt="" src="/sites/all/themes/lac_D7/images/buynow.png" style="height:21px; width:40px"/> xxxx</p>, then the code sent to the browser is <img alt="" src="" style="height:21px; width:40px" width="40" height="21">
On a previous occasion it generated a src URL to somewhere in youtube.

If the original source of the image is in the files directory, it works fine.

NOTE: I don't mind too much it not working for these images, I can resize them manually if necessary, but it is a pain when it corrupts the link and one is left trying to find out why.

Thanks, Tony