1. see
Allowing Directory Requests in the mason administrators manual. you'll probably want something like
PerlSetVar MasonDeclineDirs 0 in your Location segment.
2. your images are being served by mason, and are probably coming with the leading part of the HTML from the autohandler (or similar, depending on your setup.)
consider using a <LocationMatch ...> instead:
<LocationMatch "\.html$">
SetHandler perl-script
PerlHandler HTML::Mason::ApacheHandler
PerlSetVar MasonDeclineDirs 0
</LocationMarch>
<LocationMatch "(\.m(html|txt|pl)?|dhandler|autohandler)/?$">
SetHandler perl-script
PerlInitHandler Apache::Constants::NOT_FOUND
PerlSetVar MasonDeclineDirs 0
</LocationMatch>
see
Controlling Access via Filename Extension