[Plugin: NextGEN Gallery] Problems uploading and inserting pictures

I noticed that my WordPress site was having problems displaying single pictures in that they would be displayed by the name with an outline. When clicked it would show the image. I tried to create a new test gallery and upload an image but after trying to upload, it tells me \directory\directory\ contains no pictures. I tried changing permissions of wp-content\gallery and below from 755 to 777 with no luck (then changed them back). I tried to reset the settings for NexGen Gallery after which some single pictures started to display. Also, when in a Post/Page and I click on the Add NexGen Gallery button in the menu a window pops up but remains empty. I can’t figure out where to check next or what might be causing the problem. This all works fine using the same computer but a different WordPress site using the same WordPress and plug-in version (2.7.1 and 1.2.1 respectively). Trying to insert a picture using IE displays a “page cannot be displayed” error in the window.