Do you happen to have Adblock enabled? Apparently it started blocking XHR requests on NG recently, which is used pretty much everywhere, for uploads, etc... was what I was going to say, but looks like this was a pretty old post, whoops!
Don't feel like erasing all I'd already typed, but have a real belated Welcome to the site though! Hope it worked out.
ReNaeNae
Lots of people have been having this issue. Try a different browser. Also try resaving, renaming and/or resizing the image slightly. Hopefully one of those options will get it to work for you.