>I would like to link an image into Word documents, so that if the original image is modified, the updated image is shown in the word documents. Is this possible, and if so, how?
>
>All help is greatly appreciated.

In the Word Menu, go to INSERT-->Object-->CreateFromFile, and make sure the checkbox "Linked to File" is on.
If you already have a link, then you may EDIT -->Links and choose the appropriate method of updating links (Automatic, Manual, Locked).

But (and it is the big BUT) even with "Automatic" link updates, when opening the document one will see the message:
"This document contains one or more links to other files. Do you want to update this document with the data from the linked files?"
on which the user must to respond.
It is the default behavior according to http://support.microsoft.com/kb/330079. There you may find solutions to dismiss the message.

Good Luck