Imagefiled uploads not working - thin grey line is appearing

I am using

drupal 5.16
cck 5.x-1.10
imagefield - 5.x-2.6

I have installed and activated the imagefield module. The imagefiled not working, when i try to upload the image- a thing Grey line shows up in the preview thumbnail area.
I read almost all the issues related to imagefield but was't able to solve this problem.

I tried installing drupal, cck and imagefield on WAMT. - I was surprised to see that everything is running perfect on WAMP. I am able to preview and upload images.

Please help me with this, I have been trying my best to find a solution for this.

Can anyone suggest me with a solution