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Try using Object>Expand Appearance or Expand (which ever is available) before making the clipping mask. Therectangle must be above the image and both selected.
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Thank you Larry! That worked. I don't know if I would have ever figured that out.
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It doesn't look like you are doing anything wrong. You could close and reopen Illustrator. If that doesn't work, you could reset preferences.
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Maybe this is what Larry is aiming at, but how did you edit the rectangle?
Peter
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please select your edited rectangle and show us a screenshot with visible Layers Panel and Appearance Panel
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draw inside should work just as well