I am displaying a bunch of thumbnail images and the latency can be very high (over a VPN) so I send all the thumbnails in a single file (like a sprite) and set the CSS backgroun
If you are using your code above for IE6 only and problem only reflects in IE6, then I guess your issue is the jquery... check the following:
$('.Thumbnails').css('background-image', 'url(ThumbSpriteTest.png)');
You have to add the 'url(img_src)'.
'url(img_src)'