I've been on the phone with tech support from my hosting provider, and we've tried almost everything. He has given me permissions for the C:\temp folder, and he even tried adding a product himself, with no success.
What is happening now, is the base_dir error is not showing up. Actually, we're not getting any errors except that when I click Submit, it brings me back to the Insert page, with the Red text next to the image paths, asking me to enter valid image files.
Appreciate your help.