"Files should already be in" does not work when changed
 

I made a new folder on the same server/site, CHMOD 777 and changed the path from the default in "Files should already be in" but it does not process any images. Why?

Have you made sure both the path and files are 777 permissions. The path is correct in the upload page and you checked the skip upload box?

Yes to both. Folder/files were 777 and I selected "Click here to bypass approval process and upload all files in directory". It just returns to a blank category page.

You can not checking the option to allow bulk upload. The bypass approval must means do not show the boxes on upload that allow you to approve images and enter titles descriptions.

You must check the skip upload option I noted in my reply above.

Skip upload and process the files already in your upload directory

That is what triggers the application to look in a directory your specify rather than a file upload prompt.