I too am having the same sort of problem. Specifically with this line of code:
admin/inc/imagemanipulation.php -- line 186
The thumbnail being created has x/y coordinates of 0/0, and the image is not resized (it's just the cropped width and height of the top left corner of the original image size).
admin/inc/imagemanipulation.php -- line 186
Code:
imagecopyresampled($this->image["des"], $this->image["src"], 0, 0, $this->image["targetx"], $this->image["targety"], $this->image["sizex"], $this->image["sizey"], $this->image["sizex"], $this->image["sizey"]);
The thumbnail being created has x/y coordinates of 0/0, and the image is not resized (it's just the cropped width and height of the top left corner of the original image size).