I have now moved the script to cgi-bin folder (file:///usr/local/apache/cgi-bin/simpleImage.cgi) and repeated chmod 755. It still does the same (showing the code). Does this mean that just putting the code in cgi-bin does not solve the purpose.

Sounds that way to me.

Do you have _any_ CGI programs working on this web server? It looks like your server isn't configured to run CGI programs at all. If you told us which web server you were using, someone might be able to help you fix that.