The setting for this is actually in the report file itself - open up the report in Crystal Reports - Go to File-> Summary Info -> and tick the box that says "Save Preview Picture".
Also in Crystal Enterprise check the box that says show thumbnail.
There are 2 settings required, that which paul described, and then in the CMC for the report object under the Properties Tab there's a checkbox for Show Thumbnail.
The Crystal Report option simply generates the thumbnail, you also need to tell CE to use it.
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