Our thoughts run as images in mind, I think. Because whenever I try to read my thoughts, all I can see are random images. These images are those constructed by my mind based on previous images I've seen in my life till now. I listen to music, and I can feel an array of images running in my mind. While listening to rock music, I see myself either holding the guitar and strumming it hard, or singing while holding the mike... sometimes I see myself standing at the rocks at sea shore, and strumming the guitar while a wave of water rises high in the air behind me.
I love saxophone music, Kenny G especially. Listening to saxophone makes me see myself in a club, dimly lit, with a date, and ballroom dancing or simply enjoying the moment.
Rock music gives me flashes of speeding on fast bikes, martial arts kick ass fighting, teleportation, sometimes looking down from a tall building, sometimes breaking a glass glass in my hands... lots of images...
While reading a novel, I see blur images of characters, places, situations, sometimes emotional expressions as well. I feel standing among them, looking at them while conveniently invisible to them. Sometimes I look at other characters through the eyes of one particular character.
Dreams are only array of images running in fast motion. All I can remember when I wake up after sleep are only few images, using which I sometimes rebuilt the possible plot of my dream.
While watching movies, however, I don't see any images in my mind, rather I store the images I see in movies and these images later, perhaps, run in my mind while doing other things, especially listening to music.
But what if, that is what my friend says, the brain has some chemical reactions, which it does, and our mind sees them as images! :D