Outlook doesn't know what to do with image when its
width="100%". Try this instead
<img alt="Product Name" src="Image.jpg" style="border:0; outline:0;width:100%;" width="200">.
Community article about this https://litmus.com/community/discussions/1058-100-width-images-on-outlook
Image will display correctly with the code you provided. However the image is not responsive which is the main goal I am trying to achieve. And the "bug" appears only with embed images (which bothers me a lot).
Image resolutions were the same in both images.
Thanks for answer,
Yeah, CSS works fine for the linked image. I am trying to use CSS for inlined images. See this link for info https://sendgrid.com/blog/embedding-images-emails-facts/. Thanks for the answer!