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I’m having the same issue with 220.127.116.11, have tried solutions listed in forum but nothing seems to work. I’m using Google Chrome but the problem also exists in IE7. I changed as there was a previous issue with Adobe Flash 9 or 10 with the image upload feature.
I am glad that it is working fine now.
I am not sure what causes this as we do not have any clients facing it but this is one of the solution provided by a Magento/Varien team member and it seems to solve the issue if file permissions are correct.