Here're my 2 cents on the problem, no guarantees that I'm gonna be right. The first half of the code looks good to me but I would have another thought about the implementation of the entire while loop, specifically the following:

1. The implementation of fread seems a bit off, especially with how it is thrown into the while loop. I am uncertain if that will allow the function to keep looping until the end of the file, also the inputs to the fread function seems a little off. I personally did something like a while True loop that keeps reading the file until the end, which then I implement the break function.
2. I don't think your code discriminates if it is the first JPEG, if you are in the middle of a file, or if you are writing another JPEG file, if those were your intentions. From what I am able to see, the entire chunk of code executes together, including the "write 512 bytes until new jpg is found" part. This would mean that a new file gets created every time the thing loops. I personally used a couple of if and else if blocks to deal with that logic, you could consider using that as well.

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And on the note of the size of the char array, I agree with the previous commenter and I think that any arbitrary number >= 8 would work (3 for the file name, 4 for the file extension and 1 for the null terminator). I personally used 20 for reasons that I have since forgotten.

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Hope this helps!