Something related to the REWRITE rule in .htaccess. Is this a new X3 website? Was it working before? If you have FTP login for me, I can take a look and try to fix it.
Your server is handling "File not found" requests separately, without passing it through to the X3 application and .htaccess file. This means it's impossible for X3 to process a REWRITE url to an image request, because your server is validating the request as "File not found" before even X3 can process the request.