Well I did everything I could think of.
After uninstalling all themes, plugins, and even wordpress. I deleted my cache and cookies, and rebooted. And started from scratch. I re-downloaded my themes, and plugins, and reinstalled wordpress through my cpanel. I didn’t edit the themes except for replacing the one line of code in from flashfader in the header.php like it says. That didn’t work.
I uninstalled everything, and then repeated the process on another computer. That didn’t work.
I installed manually a older version of wordpress, that I had downloaded back in July. That didn’t work.
I gave up trying defeated. Went to bed, got up, took kids to school, did some shopping. And have just tried uploading an image, and low and behold, it’s working.
So, it was either my hosting, or it was wordpress that was the issue.
So if anyone else has this problem. Do nothing. It will right it self eventually.