In case anyone else finds this thread via a search, I was having the same problem as described by the original poster. Here's what turned out to be the cause, in my case.
My layout involved two div objects placed horizontally next to one another. One on the left, and the other on the right. The left div was set to have a width of 100%, although it's contents did not cover all of that space due to internal padding. the right div contained the img which was not triggering any mouse events (including the "title" attribute not working, but onMouseOver and onMouseOut also did not work.)
So this was due to z-ordering. The mouse events were instead being handled by the div object on the left, because it's 100% width encompassed the full browser window. Since the left div had a "position" attribute of "absolute", it could legally have it's z-value set, and so I set its z-value to "-1". This fixed the issue.
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