This is weird. The image that is produced when uploaded using editproduct.php seems to produce an imgage alt tag with the entire URL to the image, but the same process in uploadproduct.php simply displays the alt image tag as the base filename.
To see what I mean, mouse over the missing image thumb on the Recent Ads link I sent. Note the URL. Now mouse over the thumb (it actaully has an image) of the image to the right. It shows as the alt tag the name of the file. The only difference between these two thumbs is the missing one was uploaded using the editproduct.php and the good one using uploadproduct.php.