I'm not sure this is a Background Manager problem of server problem. However, I have tried twice to create an image set. After doing so, the images show up in the wp-content\media directory just fine. When looking for the newly created image sets in the Background Manager/Image Sets screen, the "image sets" indicates that there are 2 image sets available on the "image sets" tab/link thing, but none are shown in the list? The message displayed is "no images sets found."
Seeing the number of people using this successfully and the capabilities it provides is exactly what I need. Hope we can figure this out.
Oh, using the the CyberChimps Business-Lite theme. Website mostly done, just need to add background image that fills screen. Possibly use multiple backgrounds at some point.