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Permission are correct. I can upload from the server no problem (I did a quick test where I uploaded 89 images to my userid folder and it worked flawlessly.
Ive disabled all mod_security in htaccess - still get No Images To Display on upload.
I will now do some testing with some updated files from swfupload.org - i will work to solve this then hopefully it will help others here who have the same issue.
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