well, now if I browse directly to the image file:
it shows an error "The image cannot be displayed because it contains errors".
The heart of the issue is that your free go dadddy hosting account is forcing banner adds on your php pages, this is causing the captcha php page "WAVT_CaptchaSecurityImages.png" not to generate the image correctly. I thought we could work around the issue by changing the extension, but apparently not.
It would seam the GoDaddy free Hosting plan will not work with captcha.