On WordPress MU 3.1. the following error appears when changing the method of managing images from the editor:
Warning: Cannot modify header information - headers already sent by (output started at /data01/virt324/domains/www.domain.com/htdocs/wp-admin/admin-header.php:35) in /data01/virt324/domains/www.domain.com/htdocs/wp-content/plugins/wp-smart-image-ii/wpsi.php on line 612