1.3.1 upgrade link-rewrite issue

[MrBaseball34]

I'm not sure how to fix a problem with a link-rewrite.
In category.tpl, we have this code:

getCatImageLink($category->link_rewrite, $category->id_image, 'category')}" 
    alt="{$category->name|escape:'htmlall':'UTF-8'}" 
    title="{$category->name|escape:'htmlall':'UTF-8'}" 
    id="categoryImage" />

No, it is returning links, in the src attribute, like this:
"http://www.mysite.com/27-Abrasives/Abrasives.jpg"

the image is located at URL "/images/Abrasives.jpg"

It works correctly with my online store but not on my development machine.

Can somebody help out?