A couple issues. First, it looks like you forgot to exit out of PHP mode:
<?php
while ($row1 = mysql_fetch_array($query)) {
$thumbnail.= $row1['title'] . "<br />";
}
// need the closing tag here:
?>
<table>
<tr>
<td><img src="images/<?php echo $thumbnail ?>" /></td>
</tr>
</table>
On top of that, the logic is strange in that it makes no sense to have the "<br />" tag at the end of a string that is going to be used as an image path.