ok, so your response made me think there was something I was missing. I snooped around a little and found the whole phpThumb/demo/ section. I ran the phpThumb.demo.check.php, and saw i needed to delete the phpThumb.config.php.default. After I deleted that, the demo check ran successfully. Here are the sections of the check that had problems:
ImageMagick features: gaussian (yellow)
ImageMagick formats: "sh: ./identify: No such file or directory" (no color, just white text box)
php_sapi_name(): cgi-fcgi (orange)
Comments: SAPI mode preferred to CGI mode. FCGI mode has unconfirmed strange behavior (notably more than one space in "wmt" filter text causes errors). If not working in "apache" (SAPI) mode, apache_lookup_uri() will not work.
magic_quotes_gpc: true (yellow)
I knew how to change magic_quotes_gpc, so i did. That wasnt my problem. I'm still getting the same grey error box that i previously posted. I dont thnk the gaussian feature is a huge problem. Maybe php_sapi_name()?