Thanks for going into more detail. The reason I wasn't getting the error was because I was only uploading one image at a time. I believe your fix is going to cause problems when you try to upload multiple and have multiple pages with the FTP upload options. For the official fix though, just look in your gallery/upload.php file for this code:
Code:
Content visible to verified customers only.
And replace with this:
Code:
Content visible to verified customers only.