I have just installed Lyx for win32 from Claus Hentschel, and I have a problem using graphics. Everything (viewing, converting) works fine as long as I do not insert graphics. If I insert a graphic and try to convert to PDF, I have a latex error "latex error: file tmp_directory/picture_directory_filename I could not locate the file with any of these extensions .eps, .ps,.eps.gz,.ps.gz,.eps.Z". However, the picture is in the specified temporary folder. When I export the lyx file into latex, it compiles without any problem, and creates the .dvi.
Can you check if the "Use temporary directory" option in Edit -> Preferences -> Paths is checked? If so, you can try unchecking it so that things happen in your local directory.. maybe that'll help.. if this works then it's an alternative to the earlier suggestion of moving the graphics files to your local directory...
Btw, the "Win32" port is by Ruurd Reitsma and Claus Hentschel's is what's called the "Windows NT/9x" port I believe.. if you're using LyX via cygwin then you're using the latter...
nirmal
