Images Not Copied Over

I created a template and successfully created a new blog based on that template.

Everything seems to work fine, but when I go to my media folder the images were not copied over. the original blog was on http://wpmobileapp.com.

Original:
http://wpmobileapp.com/wp-content/uploads/2012/03/facebookmust.jpg

Templated Blog image path:
http://wpfanpage.wpmobileapp.com/files/2012/03/facebookmust.jpg

So the templated images are not showing up because they did not copy over not did they retain the original path.

I checked all the boxes except "USERS" when creating the template.