You need PHP extension GD2. Will not work with GD version 1, must have version 2, which was released with PHP 4.3.
use this test script to confirm proper installation:
<?php
header("Content-type: image/png");
$im = @imagecreate(110, 20)
or die("Cannot Initialize new GD image stream");
$background_color = imagecolorallocate($im, 0, 0, 0);
$text_color = imagecolorallocate($im, 233, 14, 91);
imagestring($im, 1, 5, 5, "A Simple Text String", $text_color);
imagepng($im);
imagedestroy($im);
?>
