An email is sent from Domino through Coexistence Manager for Notes, the conversion of a message changes the embedded image in the signiture to the message that the Embedded image was moved to file:pic.jpg
This happens Natively (Without Coexistence Manager for Notes) as well as when the Coexistence Manager for Notes is used.
The "Message Content formatting" is set to "from Notes to Plain Text"
In the Domino Admin open the "Configuration" tab
Choose the appropriate server
Choose tab titled "MIME"
Choose "Conversion Options"
Change the setting for "Message Content formatting" to the bottom option called "Create Multi-part alternative ..." the issue should be resolved.