The theme I am using is a custom theme that a fellow employee made.

I have disabled every single plugin on the site and it still didn't work.

I made sure the default media folder is wp-content/uploads.

I have created the folders
wp-content/uploads/bwbps
wp-content/uploads/bwbps/docs
wp-content/uploads/bwbps/thumbs
and set them all to 777
I first couldn't get the ajax popup to work, so I went with the hidden form for the add form.

The gallery page is at... http://www.thevillageshappenings.com/photo-gallery/
The only thing I've changed in the default code was in the CSS I changed the background to transparent.
On the page content, I have [photosmash id=1] and [photosmash form]

Ok, it looks like the theme might not contain:

<?php wp_footer(); ?>

It should go in the footer.php. The theme is not loading in the jquery.form.js file which causes the Ajax submission of the form. WordPress adds that file to the footer when wp_footer(); is called.

That should fix you right up! (I hope ;-) )

Cheers,
Byron

Welcome ;-)
BB