OK. the only thing, that comes into my mind is to check absolutely minimal working example. So try to make a file called for examle image.php, and write there:
<?php
header('Content-Type: image/jpeg');
$image_width = 200;
$image_height = 40;
$image = imagecreate($image_width, $image_height);
imagejpeg($image);
?>
And check if it is working (localhost/image.php or something like that). The browser should display something that is image. Be 100% sure, that Content-Type (Type) is from capital 'T'. Some browsers had problems with that (PHP Header - Content-type: image/jpeg - Not working for Internet Explorer).
Then please write in comment what happens. If there are any problems, please remove the header line. Then php should "error" something :). Hope it helps... I will update this post due to Your answers, as there is to little that we know, to answer it just like that :).
Best regards.