IE8 not displaying images (red x) ... sometimes

I'm going mad with the following problem which does not happen on any other browser (Chrome, Firefox):

• IE8 cache is cleared
• browser starts opens HTML/Javascript page that requests and creates a few images dynamically. This HTML page is served from a Tomcat server localhost:8084.
• Most of the time out of 10 images that are requested IE displays RED X.
• Developer Image Report (F12) shows some images "file size" as correct # bytes, yet the image is still not displayed, or some images file size "unknown bytes" and image doesn't work.
• Sometimes 2-4 out of 10 images show up and the rest fail!
• Sometimes in a mad fury of hitting refresh 1 billion times, the images show up.
• The real kicker is that when I put a break point in my HTTP Server, the socket isn't even opened. IE isn't even attempting to fetch the images from the server before failing.
• And finally if I run the same code but request an image from somewhere like google maps, it works in IE without problems.

Here's my javascript code:

<script type="text/javascript">
    var ctr = 0;
    function getImage(url)
    {
        var img = document.createElement("img");
        img.src = url + "&nc=" + ctr;
        ctr ++;
        img.width = 128;
        img.height = 128;
        document.body.appendChild(img);
    }

    for (var i = 0; i < 10; i=i+1)
    {
        //THIS FAILS MOST OF THE TIME
        setTimeout("getImage('http://myHostName:9980/GenerateImageStatic?parameter=1')", 1000);
        //THIS WORKS! WHY?
        //setTimeout("getImage('http://maps.google.com:80/maps/api/staticmap?center=Brooklyn+Bridge,New+York,NY&zoom=14&size=512x512&maptype=roadmap&markers=color:blue|label:S|40.702147,-74.015794&markers=color:green|label:G|40.711614,-74.012318&markers=color:red|color:red|label:C|40.718217,-73.998284&sensor=false')", 1000);
    }
</script>