Then probably your server's graphics libary (we support GD or Imagick - see requirements) is not configured correctly or an too old version. You will then have to contact your host.
GD 2.x should actually be fine. But it may not be setup right or supporting transparent png24 at all. Best chance is to contact your host. He is the only one that can help then anyway.
Ask if their GD libary has Png24 support for example. Zenphoto tries to add (or merge if you will ) the png24 image on the actual image. That is apparently failing.
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