the maximum image dimensions are set in the webassist/kfm/initialize.php page:
$kfm->defaultSetting('max_image_upload_width', 1024);
$kfm->defaultSetting('max_image_upload_height', 768);
edit those lines to change the dimensions allowed.
the second screen shot is of the stand alone file manager settings.
WebAssist -> Forms -> Insert File Manager.
to access the security settings, goto WebAssist -> Form -> HTML Editor -> Site Settings.