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Harry T is certainly an authority on this subject, see his Mobipocket Creation Tutorial. However, I occasionally use the program in creating e-books that contain many images and maybe if I tell you what I'm doing, you can compare it to what is happening to you.
I format my books using Book Designer, which creates an HTML file with the images imbedded. After loading the HTML file into Mobipocket Creator, and providing the metadata, I then go to the original HTML file and copy each image from that into the folder with the book that Mobipocket Creator is creating.
If there's an easier way of doing the job, I don't know of it. If you have so many images that that sounds like an onerous job, maybe Harry will be able to help you tomorrow during his daytime.
Jim
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