Hi teeger,
This issue has been confirmed as a bug and has been referred to our engineering department for correction. However, at this point, I am unsure as to when it will be resolved.
In the mean time, you can upload your images into a new folder and you should be able to find them on the image selection page by selecting that folder. To create a new folder, please go to Auctiva -> Images(tab) -> Manage(Folders).
-Mike