it may be that your mail host limits the size of outgoing emails.

the pic may be huge (altho, i note, you say it happens with small files). if that be the case, you may have to resize the pic. with today's cameras, the pic could be dozens of mb.

I was able to send embedded pictures and attachment up to about 5 days ago without any problem.

The size of the emails and attachments that are being sent are only about 500kb.

It was right before I upgraded to the most recent version of Thunderbird.

To diagnose problems with Thunderbird, try the following:

• Restart Thunderbird with add-ons disabled (Thunderbird Safe Mode). On the Help menu, click on "Restart with Add-ons Disabled". If Thunderbird works like normal, there is an Add-on or Theme interfering with normal operations. You will need to re-enable add-ons one at a time until you locate the offender.
• Restart the operating system in safe mode with Networking. This loads only the very basics needed to start your computer while enabling an Internet connection. Click on your operating system for instructions on how to start in safe mode: Windows 8, Windows 7, Windows Vista, Windows XP, OSX

If safe mode for the operating system fixes the issue, there's other software in your computer that's causing problems. Possibilities include but not limited to: AV scanning, virus/malware, background downloads such as program updates.

Restarted TBird with Add-ons disabled. Did not fix the problem.

Restarted computer in Safe Mode with Networking. Did not fix the problem.

ATT uses Yahoo Mail. Was able to send emails with embedded pictures and attachments from Yahoo Mail online.

The time-out shows that the email is at 99% sent. Could there be an end of file designation that is either missing or not being read by Yahoo?

It could be your modem.... http://thunderbirdtweaks.blogspot.com.au/2010/10/i-cant-sent-mail-networktcpsendbuffer.html

Wasn't the modem.

Changed the settings and it didn't help.

HELP!!