Hello;
actually, when you create a new category in your ACP, let's say it as ID #32, the script creates two folders:
- data/media/32/
- and data/thumbnails/32/
you
must have in data/media/ and data/thumbnails/ the same number of sub-folders with the same names.
When you upload an image to data/media/32/ folder, the associated thumbnail will be created in data/thumbnails/32/ folder.
By the way, have you installed 4images using Fantastico?
Keep on fighting!
PS: whynot use KurtW's template: