I have read about 30 different topics about this problem and some people said they have sorted the problem and some not. I am one of those who is still struggling.
I use PHP FCKeditor and everything is working good on my website apart from image upload.
This is how I set up the configuration file according to one forum member from a different topic.
// Path to user files relative to the document root. $Config['UserFilesPath'] = 'http://'.$_SERVER['HTTP_HOST'].'/' ; // Fill the following value it you prefer to specify the absolute path for the // user files directory. Useful if you are using a virtual directory, symbolic // link or alias. Examples: 'C:\\MySite\\userfiles\\' or '/root/mysite/userfiles/'. // Attention: The above 'UserFilesPath' must point to the same directory. $Config['UserFilesAbsolutePath'] = $_SERVER['DOCUMENT_ROOT'].'/' ;