Nilem,
Awesome. I made a few more changes below to the code and now it actually works with merged cells. The only other problem I have that needs to be resolved is that the code only works when part of the picture is in the top left cell in the merged cells. You have any ideas for being able to resize it from anywhere on the worksheet?

 With r.MergeArea
        1Top = r.MergeArea.Top
        1Left = r.MergeArea.Left
        1Height = r.MergeArea.Height
        1Width = r.MergeArea.Width