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How do any of the modules make use of image manager?
You can access the images in any module making use of the image manager button in the submit form (like in the submit news/downloads/links/whatever). Click on that and you get a little window that displays the uploaded images, pick the one you want, select an alignment button and it will be inserted into the text. It's not very intuitive at all, but its actually quite handy.
Image manager has a permission system controlling which groups can see which categories of images. You have to set those through admin/system/image manager in order to be able to access them. I'm assuming you are the webmaster though !
There is also restrictions on size/file size set in the same menu, but if that is why there are upload problems I think it should warn you that the limits were exceeded ? If FTP didn't work either then maybe then its probably not a XOOPS problem, maybe the directory is not writable or something ?
Good luck