I have been looking also for that same feature (Group albums) and I’ve found that they are working on it for a new release 1.9. Not yet ready. More info here:
I have also the problem to upload images, but I have seen that I can upload images with lowercase extension files (.jpg). With uppercase files (.JPG) I get the error.
I’m using WP 3.1, BP 1.2.8 and Album+ 1.8.8 on a local testing enviroment under a MAMP server (Mac).
@almarma Not recently active