@esmi - Thanks, I know. The old site was 3.4.2. That's the CLIENT's old site - the one we're moving INTO our Multisite install which is up to date. They didn't have anyone maintaining their site for awhile which is why it's out of date - same with their theme - they hadn't changed out their theme back when WP rolled in featured images, custom menus, etc... big updates. So now we're dealing with an upgrade from their site to our install, their theme to ours, from their single site to our multisite. Everything is fine except for this image issue.
I posted it as 3.4.2 because this site started as a single site that WAS 3.4.2 before we ported it into ours and I thought that might be important. I guess now that it's on ours you can go ahead and change it to 3.5.1.