For what it’s worth. I was having the same problem. When I took pingomatic out of my update services, the hanging stopped.
You don’t have the graphics library extension enabled in your Web server.
Not sure if the settings are the same for IIS, but for Apache, I had to uncomment out the following line in my php.ini file:
extension=php_gd2.dll
Once that was uncommented and I restarted my Web server, thumbnails were created whenever I uploaded an image and the thumbnail choice is no longer crossed out.
Also getting this error — for the record. Will remove pingomatic reference.
