I am developing a module which pulls aerial images into TOC. I don't have any problem with .tif files but .jpgs.
Here is an example of .jpg image file set
I am able to get the image on the map and TOC but then AGP begins hanging forever. I tried it manually I had the same result. I can open the same file in ArcMap without a problem.
If you have the "Hide extensions for known file types" option turned on in the File Explorer, it won't show extensions like jpg, but it will show the ones like .jpg.ovr. For example, if I view a few TIF folders in one directory, this is what it looks like with the option on vs off