I hate to say, but I'm unable to upload directly from the server, also.
Safe Mode is off, I've chmod'd the "user", "1", and "files" folders to 777 and I'm getting no results, and the pics remain in that folder.
Any ideas? I just installed the newest version yesterday. vBulletin 4.1.6.
[EDIT] I just realized that it just won't process multiple uploads, even with the standard upload method. Single uploads are fine.