It’s both a theme issue and wordpress 2.7 issue. It has to do with the way the images are called in the custom fields. The change needs to be made within the php. I don’t know enough about it to make it work in 2.7 but I’m still searching. If someone here knows php and can help it would make this free theme usable in the new version of wordpress.
Here’s an example of what I mean. The magazine theme, Branford Magazine, needed the same changes made to get the images to show:
https://www.der-prinz.com/support-forum/branfordmagazine-general-theme-support/images-dont-show-up-heres-the-solution-1/
I have tried hacking the code for the premiumnews theme but have had no success yet.
If anyone figures it out, please post the fix here.