Can you do both file and image backups on the same machine?
Yes.
Next question is how? On the server i went in to settings Client and set Separate settings for this client and both file and image backups are enabled but it is only doing file backups. On the main settings for clients i have image backups disabled. Shouldn’t the separate settings override that?
Correct, the Separate Setting should override the global settings. What do you have set for “Volumes to backup” in the “Image Backups” tab for the specific server? Try just setting C, instead of “ALL” or “ALL_NONUSB”. I ran into Image Backups not starting when the machine only had one drive letter but was set to “ALL_NONUSB”.
EDIT: I have also found that some settings do not take effect until the urbackup service is restarted, so after you have the settings exactly how you want, restart the service.