For questions and problems with the CMS core. This board is NOT for any 3rd party modules, addons, PHP scripts or anything NOT distributed with the CMS made simple package itself.
Cataloger tries to upload the files into its own directories under the CMS uploads directory.
On install, it tries to create "catalog" and "catalog_src" directories in the CMS uploads dir. If that failed, it would explain the problem, or if the permissions on those directories prevent the web server from writing to them.
It's also possible that there's a bug in the image display piece of the module. If the directories exist and the permissions are correct, let me know, and we'll try some other approaches.
I have this same problem with missing images. Upon install of the module it didn't create the /uploads/catalog/ or /uploads/catalog_src/ folders. I created them, all chmod'd to 777 but this hasn't fixed the problem.