I've search the forums (and web) with no solution to this issue. The few suggested workarounds seemed to address slightly different problems and didn't work in my case.
I can upload image files just fine and have confirmed that thumbnails are being created correctly. However, the admin page for creating a new post (from which images were uploaded) does not show the image thumbnail or give the option of inserting the image into the post editor. All I see is a blank blue square with the image title. (screen capture) When I click on the blue square, I'm presented with the option of inserting the link into the editor. (screen capture). The page source shows (for the first image in this example):
<div class='upload-file-data'> <input type='hidden' name='attachment-url-560' id='attachment-url-560' value='/wp-content/uploads/2008/01/012308_21291.jpg' /> <input type='hidden' name='attachment-url-base-560' id='attachment-url-base-560' value='http://weblog.javazen.com' /> <input type='hidden' name='attachment-is-image-560' id='attachment-is-image-560' value='0' /> <input type='hidden' name='attachment-page-url-560' id='attachment-page-url-560' value='http://weblog.javazen.com/?attachment_id=560' /> <input type='hidden' name='attachment-title-560' id='attachment-title-560' value='Fire 4' /> <input type='hidden' name='attachment-description-560' id='attachment-description-560' value='' /> </div>
This issue appeared after two significant server events: 1) the blog site was moved to a different server with a different physical directory for the wordpress installation and 2) wordpress was upgraded to 2.3.0. Subsequent upgrade to 2.3.2 has not resolved the issue.
If the issue was related to a different physical drive directory structure, I would expect old image links to thumbnails to fail, but uploaded image links to thumbnails for post server/wordpress upgrades to function properly.
I've tried all I can think of to resolve this and would welcome any suggestions.