I think it would be nice to have a thumbnail / image preview shown in the repository settings page | No Image section reflecting the default image. Also it may be nice to have the images from the File Manager available so one wouldn't have to upload an image that is already available there.

Maybe, if no image is offered for upload, the repository should default to an image from the File Manager reflecting the file type?

(edit- I posted a reply but I'm not sure it made it since I didn't get the '...posting to a moderated forum...' message.)
Am I sensing a bit of overlap between the Gallery and Repository modules? It seems both offer the same type of functionality but with different ways of presenting the media. I like the tiling option the Gallery offers as well as the pop-up viewer. I think both modules could be combined in a way to make a more efficient presentation to the user and a more productive job for the site admins.

You can select any image within your portal. In the no image setting you can select the directory you want to look at and then the dropdown listbox gets filled with the files within that directory. If you're not seeing files that you know are there then try synchronizing the files and the database in the File Manager.

As far as having the thumbnail show up in the Settings page, I've added the enhancement to Gemini http://support.dotnetnuke.com/Default.aspx?p=22&i=2379