You have a problem with the undeclared $i in the while($htmlLines[$i] line. Also, you do not use the index of the array in the loop, so consider using a for(each) loop.
Then, your substitution is wrong, it should be ...//ig instead of /ig//ig. And you don't have to look for a match, just do a global replace; that is going to save you a little time on large files.
And one more thing: You seem to be using a Windows environment (the "Documents and Settings" line). In this case you can make the first line just #!perl, because /usr/bin won't exist anyways.

Hope I helped.

P.S.: Here is your (hopefully) fixed code:

#!/usr/bin/perl
#htmltest2.plx
# Program will read in an html file, remove the img tag and print out
# no need for file variable yet: open (INFILE, "<".$htmlFile) or die("
+Can't read source file!\n");
use warnings;
use diagnostics;
use strict;

my @htmlLines;
open INFILE, "t.htm" or die ("Sod! Can't open this file.\n");
@htmlLines = <INFILE>;

@htmlLines = scrapTag(@htmlLines); # calls method to remove image tags

sub scrapTag  # removes image tags from HTML document
{
  my @htmlLines = @_;
  for (@htmlLines) {
     $_ =~ s/<IMG\s+([^>]+)>//ig # replaces each instance of image tag
+ with nothing!
  }
  return @htmlLines;
}

for (@htmlLines)
{
  print;
}

print "\n\n";
sleep 2;
print "Success?!\n"
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