Uploading images from the local PC works fine, I was wondering if it is possible to have wordpress copy any images uploaded via url to that directory. Right now it just hotlinks it.
Fixed It.
If anyone is having the same problem….
It was the .htaccess file I uploaded, it owerwrote wordpress’ one. Simple disable and re-enable of customised permalinks and it is back to normal (thanks to http://ww.wp.xz.cn/support/topic/219164?replies=3)