Hi Andy,
I know this might be a little late, but I had the same problems and I thought I would share how I fixed them, since this is the top hit in Google. First off, in the image screen you need to make sure that you select a storage group. If you don't, then the error appears... It also seems that it works the best when you fill in image title, then pick the storage group. As far as the ftp upload, make sure that the fog password in the About->Fog Settings is correct. The place it is used is at: FOG_TFTP_FTP_PASSWORD. I hope this helps. This fixed both of my problems.
