The most recent version of IAMWW w2 DnD displays the full content or "Continue Reading…" at the point where any <!-- more --> tags have been used in your posts. However, the archives and category pages still use the excerpt.
You can make changes to the theme's WordPress loop to display the full content rather than the excerpt. This will facilitate the display of images in pages with multiple posts (e.g., the archives, while viewing a category, etc).
Change: <?php the_content_rss('Continue Reading...', FALSE, '', 50); ?>
To: <?php the_content('Continue Reading...'); ?>
The loop will then display the full post.
Note: All archive files (e.g., archive.php, category.php, etc) could contain this code...