the PowerGallery/galleries/slideshow_wide/index file on your server is not a correct for for either power gallery 1.2.2 or power gallery 2
power gallery does not use caching, power gallery 2 does, but it would use the PowerGallery/webassist/caching/PG_CachedResize_Image.php
and the path to the cache folder would be dynamic.
If you are going to upgrade to Power Gallery 2, there is more to the upgrade process than just copying the gallery folder into your site. If you don't want to upgrade to version 2, you should at least upgrade the gallery files to the 1.2.2 version.