There should already be folders for large and medium images when you install Zen Cart. Where did you create folders for the images? It sounds like you uploaded the images to the incorrect location.

If you get Image Handler 2 (aka IH2) from the Free Software Add Ons section, you only need to have one size of the image (large). IH2 will do the rest. You can see IH2 in action on the Holzheimers site in my sig.