An error with ImageCreate() is most likely a problem related to GD library. But the image upload requires a newer version of GD than the CAPTCHA, and you seem to have that working. Add a photo album page and see if it will accept a gif upload or give the same error. If it gives the same error, then it is a GD lib problem. If gif upload works, then I'm stumped.
You can always skip the CAPTCHA altogether. There is a non-CAPTCHA version of the contact form, just do the following:
Rename includes/contactform.php includes/contactformCAPTCHA.php
Rename includes/NOCAPcontactform.php includes/contactform.php
But remember that on any upgrade, your change will be overwritten. You'll have to make the switch again.
I, and most people, hate CAPTCHA anyway. But it is THE deterrent to form SPAM that gets out of control. In future versions, I may default the other way or change the CAPTCHA, or use less reliable spam avoidance.
