Category Images Are Broken

[Eighteen48]

Okay this is a little strange, I believe it was talked about before here, but doing a search in this section and "General Support" just brings up 59 pages of images being broken due to other things like SSL and incorrect .htaccess and directory permissions.

 

My problem is this, in the admin control panel under Configuration/Images, I have the settings for "Image Required" set to false, as I do not want my categories to have category images and thus never uploaded any. For some reason even when creating new categories I get a broken image for where the category image is suppose to be. I know I could easily just upload a transparent gif to solve the problem, but I want to find the root of the problem and nip it in the bud completely.

 

Thanks