Image Manipulation Module

Ok, I'm not sure if this is in the right forum, please move if not.

I've been trying to install the image manipulation module (info - http://codex.gallery2.org/Gallery2:Image_Manipulation) but have run into some problems.
Everything seems to be displaying correctly (I get all the new editing options with the ajax interface, in the photo editing area) but whenever I try to make any change on the photo I simply get back a 'broken image' thumbnail.

The image is still in the g2data folder (outside webdir, /var/lib/g2data), but it will not display.
When trying to rebuild thumbnails, the images that have been edited get errors and do not rebuild.
No pictures get edited in the g2data folder.

The only changes I made to the code was some include dirs (set to 'http://<example>/gallery2/', changed to 'http://<example>/'), as my G2 install is not in a sub-dir. Could this be causing the problems?

Just wanted to know if anyone else had tried to install this module, and if they had similar problems?

Or any other suggestions for things to try.

Thanks in advance for any tips,
cOwMoO