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Virtual Happy Hour is canceled this month (March) due to Good Friday.
You could try to check the access rights for your EPiServer CMS file manager. Perhaps you do not have sufficient access rights to create a page file folder in your file manager? What EPiServer CMS wiill do when you edit an image (and chose not to overwrite the original image file) is to create a page files folder and save the edited image as a copy there.
Not sure if this is the problem, but it is worth a try