When trying to upload images the image never gets uploaded although the image name appears in the folder and the permissions have been set via IIS to allow anonymous access to the images folder. SOLUTION
This is a problem with the ~/images/ folder. When permissions have been incorrectly set - the image will be uploaded, but a "missing image" icon (as the one below) will appear:
Please, check the permissions on the ~/images/ folder as the user might not have enough privileges to write and upload files to this location.