que hago mal?

[delphi.com.ar]

Manteniendo tu lógica:

Código Delphi [-]
var
  Stream: TMemoryStream;
  Jpg: TJpegImage;
  GraphType: TGraphType;
begin
  Stream := TMemoryStream.Create;
  try
    if Assigned(Query1.FieldByName('logo')) then
      try
        TBlobField(Query1.FieldByName('logo')).SaveToStream(Stream);
        if Stream.Size > 0 then
        begin
          Stream.Position := 0;
          Stream.Read(GraphType, 1);

          case GraphType of
            gtBitmap:
              Image1.Picture.Bitmap.LoadFromStream(Stream);
            gtIcon:
              Image1.Picture.Icon.LoadFromStream(Stream);
            gtMetafile:
              Image1.Picture.Metafile.LoadFromStream(Stream);
            gtJpeg:
            begin
              Jpg := TJpegImage.Create;
              try
                Jpg.LoadFromStream(Stream);
                Image1.Picture.Assign(Jpg);
              finally
                Jpg.Free;
              end;
            end else
              Image1.Picture.Assign(nil);
            end;
          end else
            Image1.Picture.Assign(nil);
      except
        on e: Exception do
        begin
          Image1.Picture.Assign(nil);
          raise;
        end
      end;
  finally
    Stream.Free;
  end;
end;