does the image dialogue box show completely empty or does it show a message saying please wait?
in the webassist/kfm/index.php page
find the following line:
<script type="text/javascript" src="j/all.php/can-minify"></script>
and change it to:
<script type="text/javascript" src="j/all.php"></script>
also make sure the server is running PHP version 5 or above.