> What does "Resolve Windows Shortcuts" mean?
It treats shortcuts like the resource that they link to. In other words, if you create a shortcut to an image, the thumbnail of that shortcut file (.lnk) will be the same as that of the actual image file.
Shortcuts were (are?) sometimes used to make sets or collections of images without having to duplicate the actual images. On a clipart CD for instance, you might have a linedrawing of a boy unwrapping a new train set under the christmas tree. That image would fit 5 categories: children, holidays, christmas, toys, black-and-white. The CD would have a folder for each category so you could browse them, but these folders would only hold shortcuts - otherwise, each image file would have to be copied to every category/folder to which it belonged, creating lots of duplicates that would eat tons of space.