Thumbmails issue when editing image

When I go into my gallery and select an image, then select edit, if I do not select a file in the image field, then the thumbnail is replaced with a full size image. To reproduce this I do the following-

Add an image to a gallery
View the gallery
Click an image
Click edit
Change the title of the image, but leave the filename field blank.
Click submit.

I now get an error message saying "The selected file could not be copied, because no file by that name exists. Please check that you supplied the correct filename." The thumbnail image on both the edit page, and in the gallery is now the full sized image.