I am running my own host. I’ve got php 5.2.5 installed with gd 2.0.34 enabled. I’m having the same grayed-out problem.
I’ve tried re-copying the wp-includes directory, and chmod’ing my entire uploads directory to 777. Tried different browsers. Tried different images.
I think I just found the problem. Uploading a .png instead of a .jpeg works – so I’m guessing somehow my libjpeg didn’t get included in gd.
Just thought I’d give the heads-up!
