Here is what I do.
1. Create a new master page.
2. Add the following image inside:
|<img src="~/Images/b.JPG" runat="server" id="one" alt="b" width="400" height="300"/> |
Where the b.JPG is stored in the Images directory - ~/YourProject/Images/".
3. Create a new page, and set it to use this template. It shows the picture as expected.
4. I move the page to a page group, so it becomes a child page of another page. I browse the live web site - the picture shows just fine again.
5. I create a new page under a page group, and set this template. Everything is as expected again. Could you please confirm this as well?
As for your second question with the static paths, yes this is the case. We have prepared a special tool you could use, when you face the problem on the public site - ReplaceTool.
the Telerik team