Google Product Forums
Re: Why do I get "Server rejected" messages when I try to upload my pictures?
Picasa Web Albums
I tried jh2nd suggestion to save the image using a different file extension (I used image preview to resave the file as a jpeg) and it solved the problem for me. This is strange as the file was already a jpeg, but it worked!
Here is a link to the file that could not upload with the "server rejected error" :
Hope that helps with the debugging Brian.