Sorry, as I said, you need an FTP program or a joomla extension to upload images. The reason is, the media manager does not upload to the media directory. It uploades to the images directory.
Although it may have made more sense for us to use the images directory, we didn't in favor of being consistent with joomla development.
It appears that joomla developers use the new media directory ( since 1.6 ) in favor of the old image directory.
I'd love to change the world... but they won't give me the source code!