Alright.. changed it back to imagemagick and it seems to work.
I've sent you ssh info so you can poke around our server.
What i need you to tell me is:
a) how can we fix it so that uploading into folders works again? As mentioned, we aren't running php in safe mode... but turning off the switch in the settings breaks things.
b) How to prevent that duplicate file issue. Is it becuase we use imagemagick? Should we be switching to gd? If that will fix things, then let me know.