Figured out the solution after a lot of digging through threads here. I'm posting this here for anyone else that runs into the same issue.
When I updated this iMac from Big Sur to Monterey, the updater changed my home folder name by capitalizing the first letter of the folder. Previously, and for as long as I've owned this iMac, the home folder was named "iMac". The Monterey updater changed the name of the folder to "IMac" (note the first letter capitalization).
Everything seemed to work fine except for viewing images inline in Messages. The fix was to:
- Open System Prefs/Users & Groups
- Create a new secondary Admin account
- Log out of the primary account and back in using the new secondary Admin account
- Re-open Prefs/Users & Groups
- Control click the main Admin account user name in the left column and choose "Advanced Options."
- Edit the account name and the home directory to match the new home directory name
- Click "OK" and log out of the secondary Admin account. Log back in to the primary account.
- Problem solved.
More info here on changing account names and home directories: Link
Meanwhile, thanks Monterey installer for being a big pain in the butt!
