Files uploaded and stored in sites/default/files show unexpected render

The files attached to posts using the upload module (stored in site/default/files folder) cannot be downloaded by anybody including admin, the files when opened in new browser window, open like they were opened in MS word (I m talking about the image files and pdf), even the logo image shows same behavior when be opened in new window.

I was able to download and open file earlier. I have checked this with .pdf, .jpg, .png and in google chrome, firefox, safari and opera.

The image files though show correctly in the posts where they were put in but cannot be open in a new window by right click.

the .htaccess in files folder is :

SetHandler Drupal_Security_Do_Not_Remove_See_SA_2006_006
Options None
Options +FollowSymLinks

I m using boost and the main .htaccess is:

#
# Apache/PHP/Drupal settings:
#

# Protect files and directories from prying eyes.

Order allow,deny

# Don't show directory listings for URLs which map to a directory.
Options -Indexes

# Follow symbolic links in this directory.
Options +FollowSymLinks

# Make Drupal handle any 404 errors.
ErrorDocument 404 /index.php

# Force simple error message for requests for non-existent favicon.ico.

# There is no end quote below, for compatibility with Apache 1.3.
ErrorDocument 404 "The requested file favicon.ico was not found.

# Set the default handler.
DirectoryIndex index.php

# Override PHP settings. More in sites/default/settings.php
# but the following cannot be changed at runtime.

# PHP 4, Apache 1.

php_value magic_quotes_gpc 0
php_value register_globals 0
php_value session.auto_start 0
php_value mbstring.http_input pass
php_value mbstring.http_output pass
php_value mbstring.encoding_translation 0

# PHP 4, Apache 2.

php_value magic_quotes_gpc 0
php_value register_globals 0
php_value session.auto_start 0
php_value mbstring.http_input pass
php_value mbstring.http_output pass
php_value mbstring.encoding_translation 0

# PHP 5, Apache 1 and 2.

php_value magic_quotes_gpc 0
php_value register_globals 0
php_value session.auto_start 0
php_value mbstring.http_input pass
php_value mbstring.http_output pass
php_value mbstring.encoding_translation 0

# Requires mod_expires to be enabled.

# Enable expirations.
ExpiresActive On

# Cache all files for 2 weeks after access (A).
ExpiresDefault A1209600

# Do not allow PHP scripts to be cached unless they explicitly send cache
# headers themselves. Otherwise all scripts would have to overwrite the
# headers set by mod_expires if they want another caching behavior. This may
# fail if an error occurs early in the bootstrap process, and it may cause
# problems if a non-Drupal PHP file is installed in a subdirectory.
ExpiresActive Off

# Various rewrite rules.

RewriteEngine on

# If your site can be accessed both with and without the 'www.' prefix, you
# can use one of the following settings to redirect users to your preferred
# URL, either WITH or WITHOUT the 'www.' prefix. Choose ONLY one option:
#
# To redirect all users to access the site WITH the 'www.' prefix,
# (http://example.com/... will be redirected to http://www.example.com/...)
# adapt and uncomment the following:
# RewriteCond %{HTTP_HOST} ^example\.com$ [NC]
# RewriteRule ^(.*)$ http://www.example.com/$1 [L,R=301]
#
# To redirect all users to access the site WITHOUT the 'www.' prefix,
# (http://www.example.com/... will be redirected to http://example.com/...)
# uncomment and adapt the following:
RewriteCond %{HTTP_HOST} ^www\.example\.com$ [NC]
RewriteRule ^(.*)$ http://example.com/$1 [L,R=301]

# Modify the RewriteBase if you are using Drupal in a subdirectory or in a
# VirtualDocumentRoot and the rewrite rules are not working properly.
# For example if your site is at http://example.com/drupal uncomment and
# modify the following line:
RewriteBase /ipr
#
# If your site is running in a VirtualDocumentRoot at http://example.com/,
# uncomment the following line:
# RewriteBase /

### BOOST START ###
AddDefaultCharset utf-8
FileETag All


Header set Expires "Sun, 19 Nov 1978 05:00:00 GMT"
Header set Cache-Control "no-store, no-cache, must-revalidate, post-check=0, pre-check=0"
Header set X-Header "Boost Citrus 1.8"



AddCharset utf-8 .html
AddCharset utf-8 .css
AddCharset utf-8 .js
AddEncoding gzip .gz


ForceType text/html


ForceType text/javascript


ForceType text/css

# Gzip Cookie Test
RewriteRule boost-gzip-cookie-test\.html cache/perm/boost-gzip-cookie-test\.html\.gz [L,T=text/html]

# GZIP - Cached css & js files
RewriteCond %{HTTP_COOKIE} !(boost-gzip)
RewriteCond %{HTTP:Accept-encoding} !gzip
RewriteRule .* - [S=2]
RewriteCond %{DOCUMENT_ROOT}/ipr/cache/perm/%{SERVER_NAME}%{REQUEST_URI}_\.css\.gz -s
RewriteRule .* cache/perm/%{SERVER_NAME}%{REQUEST_URI}_\.css\.gz [L,QSA,T=text/css]
RewriteCond %{DOCUMENT_ROOT}/ipr/cache/perm/%{SERVER_NAME}%{REQUEST_URI}_\.js\.gz -s
RewriteRule .* cache/perm/%{SERVER_NAME}%{REQUEST_URI}_\.js\.gz [L,QSA,T=text/javascript]

# NORMAL - Cached css & js files
RewriteCond %{DOCUMENT_ROOT}/ipr/cache/perm/%{SERVER_NAME}%{REQUEST_URI}_\.css -s
RewriteRule .* cache/perm/%{SERVER_NAME}%{REQUEST_URI}_\.css [L,QSA,T=text/css]
RewriteCond %{DOCUMENT_ROOT}/ipr/cache/perm/%{SERVER_NAME}%{REQUEST_URI}_\.js -s
RewriteRule .* cache/perm/%{SERVER_NAME}%{REQUEST_URI}_\.js [L,QSA,T=text/javascript]

# Caching for anonymous users
# Skip boost IF not get request OR uri has wrong dir OR cookie is set OR request came from this server OR https request
RewriteCond %{REQUEST_METHOD} !^(GET|HEAD)$ [OR]
RewriteCond %{REQUEST_URI} (^/ipr/(admin|cache|misc|modules|sites|system|openid|themes|node/add))|(/(comment/reply|edit|user|user/(login|password|register))$) [OR]
RewriteCond %{HTTP_COOKIE} DRUPAL_UID [OR]
RewriteCond %{HTTP:Pragma} no-cache [OR]
RewriteCond %{HTTP:Cache-Control} no-cache [OR]
RewriteCond %{HTTPS} on
RewriteRule .* - [S=3]

# GZIP
RewriteCond %{HTTP_COOKIE} !(boost-gzip)
RewriteCond %{HTTP:Accept-encoding} !gzip
RewriteRule .* - [S=1]
RewriteCond %{DOCUMENT_ROOT}/ipr/cache/normal/%{SERVER_NAME}%{REQUEST_URI}_%{QUERY_STRING}\.html\.gz -s
RewriteRule .* cache/normal/%{SERVER_NAME}%{REQUEST_URI}_%{QUERY_STRING}\.html\.gz [L,T=text/html]

# NORMAL
RewriteCond %{DOCUMENT_ROOT}/ipr/cache/normal/%{SERVER_NAME}%{REQUEST_URI}_%{QUERY_STRING}\.html -s
RewriteRule .* cache/normal/%{SERVER_NAME}%{REQUEST_URI}_%{QUERY_STRING}\.html [L,T=text/html]

### BOOST END ###

# Rewrite URLs of the form 'x' to the form 'index.php?q=x'.
RewriteCond %{REQUEST_FILENAME} !-f
RewriteCond %{REQUEST_FILENAME} !-d
RewriteCond %{REQUEST_URI} !=/favicon.ico
RewriteRule ^(.*)$ index.php?q=$1 [L,QSA]

### START JS GZIP ###

AddEncoding x-gzip .gz
ForceType text/javascript

# RewriteCond %{HTTP_USER_AGENT} !".*Safari.*"
RewriteCond %{HTTP:Accept-encoding} gzip
RewriteCond %{REQUEST_FILENAME}.gz -f
RewriteRule ^(.*)\.js $1.js.gz [L,QSA]
### End JS GZIP ###

### START CSS GZIP ###
# Requires mod_mime to be enabled.

# Send any files ending in .gz with x-gzip encoding in the header.
AddEncoding gzip .gz

# Gzip compressed css files are of the type 'text/css'.

ForceType text/css

RewriteEngine on
# Serve gzip compressed css files
RewriteCond %{HTTP:Accept-encoding} gzip
RewriteCond %{REQUEST_FILENAME}\.gz -s
RewriteRule ^(.*)\.css $1\.css\.gz [L,QSA,T=text/css]

### End CSS GZIP ###

# $Id: .htaccess,v 1.90.2.5 2010/02/02 07:25:22 dries Exp $

one more unexpected behavior was instead of sites/default/files uploaded files were picking up the address sites/default/files//sites/default/files but this problem solved it self. No idea how. And no the said directory does not exits

Mean while I have checked the file system setting, the path was ok and never been changed.
I have some contrib modules installed but cannot identify which is causing problem - core or contrib.

Website is www.iipta.com/ipr