Hello – I have been doing some work with “hardening” my WP sites, and I experienced the same problem as Andy Roy with one site that I am modifying significantly. I have not yet resolved it, but I am sure that the problem is in ownership of the images. When I look at the files available in the control panel, there are over 300 images, but when I try to use an existing image or upload a new image, they are forbidden 403. I also get the grey squares in the media library that Andy got.
One of the “hardening” efforts I used is to protect images etc. from being modified or used (hotlinked) by others. This apparently persists even when the Better WP Security plugin (among others) is deactivated. I suspect the answer here is to deactivate the appropriate setting(s) in the original security software.
I’m not going to link to my site because it is in constant flux, but then also sometimes off-and-on.