I had the same problem with the thumbnails, but it went away after upping my memory limit to 70Mb in my php.ini file.
It did work great in my developer server (xampp), and in the real server (I asked my hosting to up my memory limit for me).
But I still get:
ID 1: A failure occurred
This happens when trying to resize images. (bulk option, even if just choosing 1 photo).
Also the "Edit Thumb"/"Customize Thumbnail" option doesn't work, when selecting a new area and clicking Update it says in red "Error updating thumbnail".
I hope that somebody can find a solution or at least an explanation for the XMLHttpRequest error. I'm sure it has something to do with the GD Library.
Thanks for this great plugin.