This is a common issue when you are developing on a machine using a virtual directory and then deploying on a machine to a root website.

Let's say your development machine is http://localhost/dotnetnuke and your production machine is http://www.mywebsite.com  To make it exactly the same, you would have to be deploying to http://www.mywebsite.com/dotnetnuke  See the difference?

There are two common ways to resolve this.  The most common is to not worry about broken images in Visual Studio and know they will work when published.  The other option is to make your development environment use your local root website http://localhost  If you choose that option, you will see images in both dev and prod.  If you only work on one website, that's a good option.  For most, though, you need to use virtual directories.

Anyway... to use an image, your image path should be ~/desktopmodules/[modulename]/images/myimage.jpg or whatever the image really is.  The point is, using ~/ will get you to the root and you can specifiy the path from there.  Your local environment will not like this because it's trying to go to something like http://localhost/desktopmodules/[modulename]/images/myimage.jpg and it's not adding your virtual directory in the path.  There are other things you can do, like looking to see if the request is coming from localhost or not and modifying the path based on that.  You could also get your module working using something like ~/dotnetnuke/desktopmodules/[modulename]/images/myimage.jpg and then go back and remove the extra /dotnetnuke just before deployment.