Uploading Category images?

[performance3000]

How can this be done? I've searched everywhere on the forum and I can't get it to work. I running it on my local Windows machine at the moment for developing so I'm not even at the stage of worrying about what is and isn't enabled on our hosting server.
It simply will not load up the images, no matter what paths I try even a full URL (in this case the IP address of the machine and the directory with image name). I can view the images perfectly well.
No-one seems to be able to get this rather basic and fundamental requirement to work successfully, am I missing something? Otherwise we will have to simply abandon the cart and look for something else, which will be a shame as it looks good and on paper the features are what we require - if you can get them to work!