Outlook 554 error due to conflict between Internet Security and Utilities

"System Administrator" blocks (error message 554) sending an Outlook message with a photo or graphic embedded in the message body. Installation is windows 7 with Norton Internet Security 2011 (updated to 2012) and Norton Utilities 14 (2011).

 

- Message is correctly sent when 1) email scan is turned off or 2) Utilities is uninstalled. 

- With Utilities installed, Norton Autofix notes an error but cannot repair.

- Norton Remove and Reinstall will not work with Utilities 14, requires manual uninstall.

- Problem still exists after manual uninstall / reinstall.

- "Nathan", the interactive support person, does not know about or have a solution to this issue.

 

Please advise.