Broken image links after moving site

I sense this has a simple solution, but I'm not seeing it.

I am using image and image assist in my Drupal 4.6.5 site. I had several pictures placed within page nodes that were working fine. Then I wanted to copy this site to a different machine to do some additional work. To do this I

1. Copied the database, drupal file directory, and the drupal filesystem path directory (the one specified in "admin/settings") NOTE: I am using private download method.
2. Restored the database drupal file directory, and the drupal file directory
3. Edited the settings.php file to change $db_url and $base_url appropriately for the new machine
4. Restored the contents of the drupal filesystem path directory to a directory on the new machine (/var/www/drupal_downloads is the directory I created, which is a different path than on the original machine)
5. In admin/settings, changed the File system path to be /var/www/drupal_downloads. Double checked that drupal_downloads is writeable by drupal (there are no error alerts at the top of the admin/settings page such as when this directory is un readable)

Everything works fine, except that the images show up as broken links.

If I right click on one of the broken links to see the url, it shows like "http://www.yaq.lan/yaq/system/files?file=images/Chico_interrogacion.thum..."

Any ideas as to what I'm missing?

Thanks

If I copy this url and place it in the browser, I get the standard internet explorer generated "page not found" page.

If I lookin /var/www/drupal_downloads/images, I see that Chico_interrogacion.thumbnail.jpg is in there. Permission on drupal_downloads is 755, permission on images is 740, and permission on the image itself is 644.

The url seems to be created correctly (the drupal install is in /var/www/html/yaq).

Is there another