After changing the file association for JPG files in the Folder Options - File Types dialog, Windows Explorer may still show the Windows Picture and Fax Viewer icon for JPG files, rather than the corresponding application's icon. To avoid this, first change the default icon for JPG files via File Types dialog Advanced button, and then associate the files to your preferred program.

In case the Advanced button is missing, click the Restore button. This will associate the image back with Windows Picture and Fax Viewer, and the Advanced button would be available now. Now, click Advanced and change the icon for the file-type to your preference. Once done, reset the file-association back to your application.

Another option is to set the defaulticon string by editing the registry directly. Open REGEDIT and navigate to:

[HKEY CLASSES ROOT\jpegfile\DefaultIcon]

Backup the key to a file

Example: Set the (default) value to:

C:\Program Files\Internet Explorer\IEXPLORE.EXE,8

Restart Windows. If the changes are not reflected in the folder, rebuild the icons using these steps:

Right-click Desktop, choose Properties
Click the Appearance Tab
Click Advanced button
Choose Icon from the drop-down list
Set it's size to 31 and press OK, OK
Repeat the above steps and set the value back to 32 (defaults)