Problems with Featured Products on the Homepage Module

[bandhits.co.uk]

I have recently upgraded from 1.4 to 1.6.On installing the New Features On The Homepage Module I had no images on the Home page but clicking on the empty space found the Product Page intact with image and text. On closer inspection there is no corresponding image created within the folder (on the server) that is applicable to this module and regengerating the thumbnails doesn't work either ! The only solution is to use the old 0.9 version of this module which seems a shame because you cannot randomise the items or choose a catagory within the block. Has anybody got any ideas as I have spent the better part of three days trying to find a solution. Any help would be gratefully received.