Weird problem with IMCE upload

Hello,

I've been searching for a lead to a solution to solve my weird and new problem. Basically, I am running Drupal 6 and am using IMCE with Tinymce editor.
Everything works fine for both my english and french site. I develop the site further and add the lightbox image gallery stuff... all good.
Then all of a sudden (or even if it was not 'of a sudden' I have no idea what caused this issue):

for the english site: the image upload works fine - no problem
for the french site: the image upload feature is messed up, meaning: when I upload an image, it shows as a broken image (cannot be displayed although I see its borders) in the file browser, and when I "send to tinymce" it is still broken.
Investigating the issue further leads to: the file browser opens the directory: sites/default/files
But the actual url of the image is: french/sites/default/files
So clearly, there is a "miscommunication" between where the file is being uploaded and where its viewed.

My settings on the french site are the same as the english;
Images>Import Path> sites/default/files/galeried'image
System files> sites/default/files

Just like the settings on the English site.

I can easily go ahead and add" french/" to the system files path, however, this will break other modules like the lightbox image gallery - all images are broken (already tried it!)

What is really weird in this issue, is that I am experiencing this problem only on the french site on the live server / host. When I download the whole site (both english and french) to my local server for testing, the problem disappears and the IMCE editor works fine!

I compared the settings between the french live site and the french local site, they are the same.

Any ideas?