Problems uploading images to image field in referenced nodes

I have If I click through to edit one of the referenced nodes, I get taken to the ode edit form of the referenced node. This content type has an image field. However, I'm not able to upload images to this field. I can select an image from my drive, but when I click the upload button, I get the ajax spinner, but the image does not appear upload. I get no thumbnail, and no reported errors.

However, if I submit the form with an error (some other required field missing for example) then when the form is rebuilt the thumbnail now show, so it seems the image did in fact upload successfully.