I have always changed the upload folder into a media folder outside the root of the WP install. This has NEVER been a problem until recent updates!
Now I can no longer:
1) have a media folder outside the wp install folder (this makes an easy hack vulnerability)
2) Changing the upload folder through the media settings within the wp install folder creates upload issues! When I upload files onto the server I can view them in the media library, but I can not use the upload function in the media library.
What a lousy way to go. I have resolved this issue by using this code:
This is however the most ignorant stupid solution I had to search for because WP changed something many users loved the way it was! Because this issue also messes up other common functionality in my WP/Buddypress installs.