Problems with Captcha word verification Please help

I've been working on this problem of several weeks now. I am having problems with Captcha Word Verification. I am using gmail and hotmail sign up web pages as examples ( see pics below.) on those two sites, and any other I go to that have Captcha, the Captcha does not display correctly, always the image is missing, some times I see the text box.

This is the timeline and what I have done.
initially :
tested across firefox ( my primary browser), IE chrome and safari. all the behaved the same
deleted cookie and check other related internet settings
did a system restore of 3 weeks ( as far back as I could go)
updated windows
uninstalled Java and installed latest version
insured update and ran AVG free virus scan
updated and ran spyware scan
ran micro trend House Call in safe mode.

Worked with tech help on another forum and got a clean bill of health regarding any Malware on my computer.

Backed up personal data and did a windows7 recovery from my recovery partition. ( this did not solve the issue. read on)
installed Avg security suite 30 day trial - updated same
updated windows 7 to service pack 1
installed latest version of Java
installed latest version of firefox

tested at this piont and the problem is the same.

did another Windows 7 recovery from my recovery partition only this time I only installed Java and tested with the results the same. the Captcha does not display correctly, always the image is missing, on some sites I see the text box.

Any help would be appreciated.
Mark