Multisite Image Upload Issue

Hi there,

I used the multisite for the first time a few days back and encountered a strange problem.
I can upload images, all the images are in the correct dir (blogs.dir/2/files/…) but in the media librady there are no thumbnails, and when I click “View” I get no image.
I have set up my web.config according to instructions (IIS7) and all other permalinks work correctly.

Here is my web.config file:

[Code moderated as per the Forum Rules. Please use the pastebin]

Any help with this will be greatly appreciated…!

George