I did find a small bug in the English language file:

in

<admin dir>/includes/languages/english/extra_definitions/image_manager.php line 30 should be:

define('IM_SELECT_IMG_IMG_ALL', 'All images');

Furthermore I did a small test with one product and one image, and all works fine. So I suspect the problem is in your config.
Can you check <admin dir>/includes/configure.php and check the values for:

HTTP_CATALOG_SERVER: should be something like http://www.mysite.com (no trailing slash)
DIR_WS_IMAGES: should be images/

and check if the image is actually in http://www.mysite.com/images/mypic.jpg

The uploaded image should appear, even before the medium and large image is made, if you select "Small images' or 'All images' in the option bar and click 'Send'.

Boudewijn