I finally figured it out after posting another frustrating comment to this thread. I can't take the credit, however, as it was quickly solved by Irv Kanode in another thread. I have copied his exact post below. It solved this issue in seconds:
ADOBE SUPPORT REPLY:
Irv Kanode - 4:15pm May 5, 06 PST (#1 of 2)
Check some of your JPEGs for CMYK vs RGB.
Might the ones that fail be CMYK and the ones that work be RGB?
When images don't work are you seeing a broken image icon or...?
Irv
Adobe Support
USER FOLLOWUP TO ADOBE SUPPORT SUGGESTION:
Kurt Wedberg - 5:27pm May 5, 06 PST (#2 of 2)
Irv,
Thanks for the reply. The images that didn't work were CMYK. When I converted to RGB they worked.
The images that didn't work were coming up with random grey scale colors.
Thanks again,
Kurt
Hope this helps everyone!