I totally understand your pain. I stumbled upon NextGen when I was making a website for the company I work for. I've had my fair share of obnoxious issues with wordpress and its various plugins.
It's really a shame that the company that now owns it (and makes money off of wordpress and nextgen) can't find the time to document it a bit better.
I've thought about collecting my knowledge of the plugin together into some sort of guide, but I haven't quite had the time. Below, I will try to be as clear and concise as possible, but I don't have time to craft it into a masterpiece.
Feel free to let me know if what else I can do. Also, what kind of "Gallery Settings" are you looking to do? I can write up a quick guide on that if you want.
Let's see if I can be of some help:
Setting up your thumbnails in NextGen Gallery
When you are working with thumbnails, you first want to decide on a size.
Go to the NextGen gallery options, to the thumbnail tab. Set the size to whatever you'd like.
If you want to display them in a thumbnail gallery, you will want "Ignore Aspect Ratio" checked so they look uniform.
The quality isn't that important, but it can have a big affect on the size of the images. Setting it to 70%-80% can make them much smaller, without much of a decrease in quality. This will cause your pages to load faster, which is always a good thing.
Now, we need to re-generate the thumbnails.
Using the same steps below, you can regenerate a single image, a couple, a whole gallery, or everything. The steps are the same.
We probably want to regenerate them all, so check the box in the header column next to ID. It will select all of the galleries on that page. If you have multiple pages of galleries, you will have to do them separately.
Above that, click on the "Bulk Actions" dropdown and select "Create new thumbnails". Click apply and your all set.
It will pop up a dialog and allow you to set the size. We've already set that up. Just click OK.
Depending on how many images you have, it might take a couple minutes.
Bingo! Your thumbnails are all set up. If you don't like the size, just repeat the steps above.
I had you set it in the options page even though you can just "Create new thumbnail" and set you size in the box that pops up for a reason. Its a good idea to know where the setting actually exists, and I will explain why below in the footnote.
If some of your images weren't the same aspect ratio as your thumbnail size, NextGen just grabs its thumbnails from the center of the picture.
For instance, if you set up a square thumbnail of 150x150px, and you had a rectangular image.
You probably want to check each individual image to make sure the thumbnail looks right.
Luckily, you can go the the gallery page (You are in "Manage Gallery" and you've clicked on a particular gallery) and click edit thumb.
This brings up a window in which you can click and drag out a box to select the area of the image to use for you thumbnail. You can play around with the size of the box and move it around to get everything perfect. It will also show you a sample so you know what your doing.
Edit thumb will always use the value in NextGen Gallery's options thumbnail tab. It doesn't matter what the actual image thumbnail size is.
In addition, if you "Create new thumbnail" and change the size, it will change the universal setting.
You aren't really editing the thumbnail, as much as doing a creating a new thumbnail, with the option to fine tune it.
I think this is confusing, because it doesn't actually mention that you might be editing the size/aspect ratio.
Ugh. My quick guide has turned into a novel. Sorry bout that.