Also had the thumbnail problem using nextgen gallery on a 1&1 hosted site. Added the 2 lines as recommended via .htaccess and it worked…..for awhile. Then, it stopped working. Checked .htaccess — and the change was overwritten – reverted to original settings. For this to work, must WordPress core files be installed in a sub-directory and not root? Not understanding why the .htaccess file got overwritten otherwise.