Please edit security policy file.
The security policy file (default.config, admin.config and guest.config) can be found in the /CuteEditor/Configuration/Security folder. In security policy file you can find the ImageGalleryPath element which contains the image gallery path information within Cute Editor. By default, it contains the following format:
<security name="ImageGalleryPath">~/uploads</security>
Just make sure the above folder does exist in your server.
BTW, which version of CuteEditor are you using?
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asp wysiwyg html editor: http://cutesoft.net/ASP
asp.net Image Gallery: http://cutesoft.net/ASP.NET+Image+Gallery/default.aspx
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