I checked the permissions for the albums directory, they were set at 755 (which, btw, works fine on the other installation) so I changed them to 777 and tried again with the same results (no upload).
It's not really a huge problem because as I mentioned, ftp works fine and I can edit descriptions and titles 'on the fly' - which works, confusing me even more. And even the subdomain is just a desire, not a necessity for me.

I appreciate your efforts very much.
Thanks,
SugarRic