NextGen – cannot create Thumbnails – tried all other solutions

Next Gen 1.7.4 – tried all of the recommendations I found on the support forums. I am using wp MS 3.1.1. NextGen worked before the latest update – now new galleries can be created and a thumbnails folder is created but no thumbnails are created – even though the tool says it is creating the thumbnails 100%. I would be happy to pay someone for their help.

Another thing I am noticing ALL user galleries are being created in teh same blog.dir directory – they used to be created in separate ones. This is a mess 🙂