Next to my application I have a subfolder called ICONS where I put PNGs of all the images I use as Icons in the app.

I just moved my app to another computer, along with the associated subfolders, and when I opened the app in xojo it can’t find the image files. They had all been converted to .xojo_image files.

When and why does this conversion happen?

Like Pictures in older projects, images are just references to the actual pictures on your machine. They do not copy the picture files. So, if you do not copy those original pictures you end up with the exact same issue as you would have had with Pictures.

The .xojo_image files are created when you enable HiDPI support on your app. Instead of creating a link to a single, specific image, it is a file that contains up to three images for the specified item - @1, @2, and @3. These are JUST the definition files for the multi-image that will be used under HiDPI operation on the user’s system. They DO NOT include the actual images - those are still retained as standalone files which the .xojo_image points to.

If you have a stable project and you need to move it to a new system, I urge you to use the File -> Collect Project Items menu to pull all of the external assents int9o the project parent folder.