Quote Originally Posted by stevensmedia
Thank you for your quick response!

Calculate image size is set to TRUE.

Yes, I did install the module via Admin -> Tools -> Image Handler.

Any other ideas?
Did you install IH for 1.3.5? The reason I am asking is if you did not you need to make sure that the changes from IH are merged into the following files:
/includes/modules/additional_images.php
/includes/modules/main_product_image.php
/includes/modules/pages/popup_image/header_php.php
/includes/modules/pages/popup_image_additional/header_php.php
/admin//includes/modules/category_product_listing.php

I have IH working fine on v1.3.5 and yes it's an upgrade not new install.