I used google's api. http://imagecharteditor.appspot.com/ Google creates a png file on the fly.
I've found a fix. In the ISAPI Filters on the default web site was missing the tomcat dll. For some reason during the installation the tomcat dll did not get loaded. Thanks for all of the help.
Found a solution. I used DeMoronize function.http://www.cflib.org/udf/DeMoronize
