"Access Denied" error while attempting to import images can be fixed by increasing the
max_allowed_packet = 1M setting in /etc/my.cnf.
The default mysql my.cnf setting is max_allowed_packet = 1M. If you are attempting to import from a directory with more than 41 images, regardless of size, or the actual number of images being imported, the "Access Denied" error may be triggered.
Solution: Increase max_allowed_packet = 2M in /etc/my.cnf
This issue is still true as of image beta3 for drupal 6, september 2009