Update: The fix is in the repository at WordPress.org and should show up in your plugins shortly. Hopefully this fixes the path issues. The version number is 0.2.0.
I was notified recently by the WordPress team that the version of TimThumb that was bundled with Tag Gallery contained a possible security vulnerability. In order to fix the issue I updated to the latest version of TimThumb for the current Tag Gallery. Unfortunately, there is a path issue occurring for many people including myself involving the way TimThumb calculates the document root for local files. I’ll be releasing a fix for this at some point today. Stay tuned.
Also, to clear up any confusion on the version and features, this will only be a security update without the new features I’ve been working on. The new version of Tag Gallery with new features will be 0.5 and as I find time to work on it I do although I’ve not be able to for months. I’ll keep everyone informed as time allows.