That v1.03 firmware does support the playback of .jpg files, although there isn't a configurable "Slideshow mode" in the M22 web interface.
Note that the .jpg files must be in the main folder of the flash drive. Also, depending on how they were encoded, you may need to re-save them as .jpg files (in a program such as IrfanView, which is a free download) in order for the M22 to support them.
If those initial suggestions don't help, tell me, what exactly do you see on the monitor that's attached to your M22?