The problem is that you are populating your IMG tags with this path:

/htdocs/pics/{random image file}

However, your pics are here:

http://{your site IP}/pics/{random image file}

Without knowing your filesystem, it's hard to say exactly where, but somewhere you are introducing "/htdocs/" to the path. My guess is the "./" part of the path, but you've said changing that has no effect.

Off the top of my head: could this be a config issue with your server? Perhaps you are pointing at the directory above your docroot (ie htdocs) instead of the htdocs directory?

AH

Update: I copy/pasted your code and ran it on my machine. When I removed the "." before the "./pics" it worked. If you do that and you are still getting "/htdocs/pics" I'd say it's almost certainly a config issue.