Windows 7: Image thumbnails fail to appear

Solution 1:

Checking Always show icons, never thumbnails (in the folder options menu you see in the asker's screenshot), applying, unchecking and applying again, solved the problem for me.

Edit 9-12-2014: Additionally, if you go to Advanced system settings and enter the Performance settings tab, ensure that Save taskbar thumbnail previews and Show thumbnails instead of icons are selected in the available check boxes. This affects all folders globally, rather than doing it for each folder.

Solution 2:

I recently had this problem, here is my solution:

1. Open a command window as Administrator
2. Open the task-manager (CTRL-SHIFT-ESC)
3. Kill explorer.exe
4. Go to your command window
5. Type: cd %userprofile%\AppData\Local\Microsoft\Windows\Explorer
6. Type: del *.db
7. In the task-manager go to File -> new Task
8. Run explorer.exe

I have some suspicions that the problem began due to low free disk space on the root drive (C:)