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I think that error means that it can't find Netpbm or Imagemagik. Is it your own server or a hosted server?
If it is a Hosted server you can go to the gallery page and download the netpbm binaries (server specific, you need to know what operating system is on the server) then put them in a folder called netpbm, maybe in your xoopsgallery/cache folder, chmod all files in it to 755 and then change the netpbm path in you admin>preferences, then it will work, but only if the host will allow you to run the binaries from within the site.
If it is your own server you need to install netpbm or you have the wrong path in preferences.
Hope this helps.