[Plugin: HTTP error on media upload by WooCommerce]

Hi all, new guy here! Our company “Kapow Interactive” Has recently been dealing with WordPress and I’m having some image upload issues. Each time I upload an image I get a “HTTP Error” The image uploads fine, but the thumbnail doesn’t appear to be visible, on closer inspection it’s just resized to 1px X 1px and I don’t understand why. I’ve done a dodgy based on this forum:

http://ww.wp.xz.cn/support/topic/images-will-not-post-in-38-writing-size-as-1px-by-1px/page/2?replies=41

tl;dr I just manually resized the thumbnail to 50px X 50px

But now when I look at the products detail page on the site all my images are of thumbnail size (50×50). It should be one large size (300px X 150px) followed by multiple thumbnail sized images. Here is an example of a product added before I updated to WordPress 3.8:
http://www.tfidownunder.com/shop/600/

This is what I get now:
http://www.tfidownunder.com/shop/mastermind-creations-r06-tigris-2/
You can see the main image is of thumbnail size.

Any help would be greatly appreciated, I can’t determine if this is a WordPress issue or a WooCommerce (2.1.6) issue. I have also checked permissions and all image related folders are 777.
I just haven’t had much luck seeing other people with this issue!