I found two issues with my VI. I don't know why it ended up working for you as is, but I got it to work after the following mods.
I placed a new invoke node (for 'Get Image') onto my diagram. It now seems to work. The old invoke node when I upgraded from 6.1 to 7 had a title of something like 'Old Get Image'. Originally, instead of replacing the invoke node, I just changed the method of the old invoke node to 'Get Image' while keeping the same invoke node (and also adjusting the code appropriately for the new graphic/picture fxs). Now, I deleted the old invoke node and replaced it with a new invoke node. I am thinking there was an issue because of this.
Also, even though i was sure that I watched the code with execution hiliting on so as to make s
ure the dataflow was going into the 'write bmp (or png, jpg, etc) function,' I now see that it is not. The reason is is because I did not choose my cases to have 'case insensitive match.' If you look at my file choice handler, the file type is coming out as lower case while the cases are labeled in upper case strings. By choosing 'case insensitive match,' the dataflow is correct and now the VI works.