We are not using photos or Albums. Only discussions and files. Uploading it as a file seems fine (although it does not resize, so not as useful as in the discussion). I have also seen I can upload and insert using the "Multiple File" upload when posting... this works and I can then resize. So My immediate problem is solved. I still have the bug that when people use the "insert/Edit Image" icon in the WYSIWYG discussion post area, they will get this error.