Thumbnails not generated

I have looked at this a little closer and found that the CHMOD is set to 600 on all the gallery folders and files. I changed to 755 and it works fine.
New images have CHMOD 644 and work OK too.
Strange or an install error?

However, the insert media button when creating a page does not work.

I had this problem earlier. In my case the issue was having spaces in the filename. I removed the spaces from the filenames and everything worked fine.