To solve this problem I contacted my hosting provider and had them work a solution for me. They where kind enough to login in and use magento and see for themselves the errors on screen and match them to the error log.
I tried all the fixes to the flash upload problem. Updating flash player, editing the .htaccess file. you name it, if it’s listed here I tried it.(cept mod security related solutions)
Well it turns out that for my VPS(Virtual Private Server) it was not pre-configured with white list like some servers.
The mod security issues I understand after the fact are usually not set on a VPS.
anyways, on to the solution.
This is quoted from the support email provided to me.
The two issues that were resolved were the following.
Modsec was blocking the following rules:
Both of these were due to the Shockwave Flash uploader. I whitelised both of
these rules. I also whitelisted the following rule:
This will stop all things within the /key/ directory from getting blocked, as
* is a wildcard.
The second issue was that Modsec was blocking Magento from creating a temp
file. This is the error that was in the error log:
[Thu Dec 22 19:18:50 2011] [error] [clientremoved but was an IP ADDRESS] ModSecurity: Input
filter: Failed to create temporary file:
[hostname ”removed but was an IP ADDRESS”] [uri
I whitelisted this as well.
These issues generated the text in red next to the file size count on the upload images page.