Image objects (images and image fields) have a property which you can set to specify whether the image should be embedded or linked (the "Embed Image Data" check box on the Object palette’s Field tab).
When the property is checked, the result is that the image file loaded into the image object is embedded into the XFA Data that’s stored in the form. When the property is unchecked, only the URI (file path or URL) is stored in the XFA Data.
I put emphasis on XFA Data above because it’s important to understand the difference between the XFA layer and the PDF layer of a PDF form in order to understand what this bug is all about: Essentially, an XFA form saved as a PDF file results in a PDF container with the XFA inside (as opposed to saving the form as an XDP where the XFA form is at the top layer). When the PDF form is subsequently filled and saved within Acrobat (Standard or Pro), the image loaded into an image field object is supposed to be saved on one layer or the other depending on the setting of the "Embed Image Data" property on the image field.
When you save a PDF form in Acrobat, what gets saved in the XFA Data (in the XFA layer) depends on the value of the "Embed Image Data" property (which maps to the //field/ui/imageEdit@data attribute). If it’s set to "link" (unchecked), then only the original path to the image file is saved. If it’s set to "embed", then the image file is text-encoded and saved in the data instead of the original file path. In either case, however, the image should always be embedded into the PDF layer (don’t worry, it doesn’t actually get embedded twice, once on each layer, I’m just simplifying things a little here) such that the PDF is self-contained and can be re-distributed without having to ensure that the linked image file remains accessible from any location.
Unfortunately, there are cases when the image file doesn’t get embedded into the PDF layer when it should be. For example, if you have an image field object which is set to link to its image file and you load the image by importing data that contains the file path then save the PDF, the image won’t be embedded into the PDF as expected.
At this time, I’m not aware of any workarounds to the specific issue I stated above (when importing the image’s file path).
The only way to consistently get image files to be embedded into the PDF as they should be — regardless of the image field object’s setting to link or embed its data — is to manually click on the image field object in Acrobat and pick the image file.
Please refer to the Bug List for updated information on the version(s) affected by this bug as well as if and when it was/will be fixed.