If anyone has the problem of:
you try to edit the thumbnail under "Manage Gallery/Gallery, it saves, you see it crop in the window next to the image editor but nothing happens with the "actual" thumbnail image; just delete the thumbnail image, open the original in your image editor, save it under a different name and then reupload the image. It doesn't help to just delete and then reupload the image and it doesn't help to just delete and then rename it, you have to save it after opening it in an image editor....go figure. Keep in mind I troubleshot this for over 4 hours trying every possibility I could think of before doing what I've mentioned.
After I did that I couldn't duplicate the same issue no matter how hard I tried.
Hope this helps someone ;)