As mentioned, the thumbnail image is being generated and the new file name (increment) is being written to the DB but the new image files is not being generated. Also, I get a DW error message when I click on the Upload Files server behavior (File Manipulation Upload Wizard) :
"It appears that one of your server-side values is improperly coded. Please check this interface for inconsistencies."
The URL and FTP access are in separate PM.