Thank you for reporting this.
I have tried to reproduce it, but I am not able to. Here are the steps I am taking:
1. Create a new category in the Images and Documents module (cate'gory)
2. Upload a picture
3. Assign it to the category (cate'gory)
4. View the Image Gallery control in every mode - the picture is shown just fine.
Am I missing something? Can you please send us the error message?
Thank you in advance!
the Telerik team