[ExternalException (0x80004005): A generic error occurred in GDI+.]
IpitchitImageHandler.Data.ImageRepository.AddNewTempImage(Stream image, String extension, Guid
I just had an similar problem (same exception) on my hosted website: It turned out to be a permissions issue, the ASP.NET account was trying to read image files from a directory outside its available scope.
I suggest you double-check the permissions as well as the element in web.config, it should be set to "Medium" or higher depending on where the files are located.