The GD library for PHP is missing or outdated

This error occurs because PHP is missing the GD graphics library. Not all platforms install it as part of PHP.

Ubuntu

Install this Ubuntu package: php5-gd, for example by doing
$ sudo apt-get install php5-gd

Then restart Apache:
$ sudo /etc/init.d/apache2 restart

More details at http://www.thanhsiang.org/faqing/node/51
Another option at http://drupal.org/node/540838

Windows XP

Go to the Windows XP control panel where you can add or change installed programs. Find the line for PHP and select change. A window pops up: find the GD2 module that is not installed by default and select it from the change application.
Restart the Apache Server.

This page is derived from a forum thread (http://drupal.org/node/134331) which may contain more information.