I had this image upload problem.
Your fix worked straightaway.
However I read several solutions before it dawned on me exactly what I needed to do.
This is it;
1 Use your ftp client to open the folders on your website.
2 Right click the wp-content folder and open “properties”.
3 There you will see the chmod 775 setting. Change it to 777.
4 Do the same to the “uploads” folder.
