In Categories selection http://prntscr.com/kqfqsk
Do you mean IP.Downloads images?
Enable this option doesn't have any effect to page speed because there are no more contents are loaded until you click on the link.
Try with = 100% in this html code
<img alt="Find out now" style="width: 100%; height: auto;" src="http://www.readersdigest.ca/wp-content/uploads/2012/10/mechanic-secrets.jpg">
Try REVERT all templates and css of Featured Content, and then run Get Support to clear cache. If it still doesn't work, give me acp access so I can test it.