Everyone should have heard the word copyright by now. What some don't know about is the DCMA.
http://www.copyright.gov/legislation/dmca.pdf
Now with that out of the way let me tell you a little story about how having a image "made" by someone else on your computer or hosted on a free picture host IS legal. Pretty much the law says so long as you're not getting paid for someone elses work, then it's legal. If said artist (and I use that lightly) demands you remove said image and you ARE NOT getting paid in any way from using the image, you can tell them to stfu and screw them.
Small timer 'artists' that make smilies, digital art, etc will try to hide behind the word copyright. Let me give a little lesson on how they could prosecute you for even HAVING a piece of their art.
LEGAL RECOURSE:
To pursue legal action an image must be Registered with the Copyright Office in Washington, D.C.
Chances are these small timers DON'T have a legal paper saying said image is copyrighted. IF they did, the image itself would have a copyright and all info concerning copyright on them. THOSE images are no nos. Besides, they must go through the whole ordeal with typing up and snail mailing a DCMA complaint. The only way they can do this is IF they HAVE a copyright.
In short, for all you 'artists', your work CAN be used by someone else for personal use unless you indeed have a copyright registered from Washington DC. The only exception is if that person is getting paid for YOUR work. Even then, you got to show original image files which means the rough files before actual finish, the screenshots of the creation dates etc. Good luck with that!
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My story? Before reformatting my pc some months ago I uploaded some images to a free photo host so I could easily grab them after format. Not giving 2 shits about the account since it had done it's job, I never 'closed' the account or used it again. Said 'artist' finds the images and emails me demanding I take them down because of copyright. Politely, I inform him about the legalities and he still harrasses me. In closing, his email address is blocked and if he goes around that, I WILL act swiftly and as severely as I can about having his email accounts closed. Harrassment on the net is a REAL thing. Your virtual images (unless paper copyrighted)... are not.