I also have a problem where thumbnails/resized images are not being generated.
I am running PHP4 with MySQL on a Windows box, and have had NO installation troubles. FULL perms are assigned to the ImageMagick execs, as well as the g2data folder.
In debug mode, I get no messages indicating either way that thumbnails/resized images are being created.
I added all the images to the album, none of them had thumbs created, so I went into Edit Album -> Album Basics and checked both "Recreate thumbnails" and "Recreate resized images". I noticed that in the section desc, that this only applies to "new" items. Is there a way I can flag all the images as being "new"? (Perhaps it doesn't think the images are new ...)