Problem uploading / creating thumbnails

Hi All,

I have been looking everywhere and speaking to my web hosts but I seem to be stuck. (I might just be looking the wrong places).

I am having a great deal of trouble getting the upload and thumbnail creation to work on one of my particular servers.

On the particular server giving me problem I am running:
Apache: Web Server 1.3.37
PHP: 5.2.6
Drupal version: 6.4
IMCE: imce-6.x-1.1

This is all I have installed now and I have done the install several time now.
When I try to upload I get a "14:30:38 Upload failed.".

When i try to make a thumbnail I get the following messages:
In IE6:

 14:33:38 An error occurred. 
/xxx/?q=user/1/imce&jsop=thumb&dir=. (no information available).

In Firefox3:
A dialog pops up -
Header: "Warning: Unreesponsive Script"
Message: "... Script: http://xxx.xxx.xxx/xxx/misc/jquery.js?o:13"

When I try to delete a file I have no issues.
I have been guessing it is some server side security or permissioning issue but I have no clue where to start. I have been fiddling with .htaccess and php.ini files but I not very knowledgable in this area so i'm not sure if this was the right avenue to go down. The files system permissions are all set appropriately for that folder (/sites/default/files/).

If anyone can point me in the right direction or can tell me what the problem is with this particular setup that would be greatly appreciated.

Regards,
M