Magento admins may receive following error while uploading image files from Magento admin panel using image upload option:
http upload error
Such error is received due to 'n' number of reasons like folder permission, server PHP handler, etc and solutions for the same are easily available on web.
But in my case, everything was fine still the issue was not resolved. Finally, the issue was found to be with .htaccess protection applied to the Magento website. The .htaccess protection should be disable while image uploading. Not sure why Magento behaves like this but server admins will have to care of that.
If anyone finds solution to bypass .htacces protection while image uploading, please comment or contact us.
Hope this helps! 😉