Found this article by Jonathan Robbins Web forms for marketers Captcha does not display which solved my problem
It turns out that there is an additional configuration that needs to be added to web.config when installing or updating this version of web forms.
If your site is running on II7 and the Integrated Pipeline Mode is set, you want to add these configuration nodes at the bottom of the next location to the configuration web.config / system.webServer / handers
<add name="CaptchaImage" verb="*" path="CaptchaImage.axd" type="Sitecore.Form.Core.Pipeline.RequestProcessor.CaptchaResolver, Sitecore.Forms.Core" /> <add name="CaptchaAudio" verb="*" path="CaptchaAudio.axd" type="Sitecore.Form.Core.Pipeline.RequestProcessor.CaptchaResolver, Sitecore.Forms.Core" />
If your site runs on IIS6 or the managed pipeline of your application pool is classic, these two nodes must be added to the following path in the configuration web.config / system.webServer / httpHanders
<add name="CaptchaImage" verb="*" path="CaptchaImage.axd" type="Sitecore.Form.Core.Pipeline.RequestProcessor.CaptchaResolver, Sitecore.Forms.Core" /> <add name="CaptchaAudio" verb="*" path="CaptchaAudio.axd" type="Sitecore.Form.Core.Pipeline.RequestProcessor.CaptchaResolver, Sitecore.Forms.Core" />
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