The file size is not what determines whether IE resizes. If the height or width of the image is larger than the viewport (not 800x600 or any other standard size, viewport is res. minus toolbars, menus, scrollbars, etc.) then IE will display
the image as it sees fit.
The image is still its original size, it is only displayed smaller.
Ask your customer to right click/Save Image As.. and then open the image with an image prog. Is it still blurry?
(If they use Windows picture preview, it will prob resize aswell