Image Module Issue - Access Denied

Good afternoon, Drupalers,
I'm having a problem with the Image module.
I have a form where you can upload an image, and that works fine. I'm using "Private" for file system settings, so it throws the image in /files, but it's filtered as /system/files after you post it. I'm guessing this is a trick with .htaccess. Per the "imagefield" module's install instructions, it states to comment out the "RewriteEngine off" line in the .htaccess file in /files. Is this a conflict?Authenticated users can view it, but if you access the URL as an Anonymous user, I get the Access Denied message.When I change the file system settings to Public, when I upload an image, it just uploads as blank.Cache is turned off, but it's a high traffic site, so I'd like to get this resolved.Any suggestions?