Regarding your 3 items:

1.  Can't change the folder.  Yes you should be able to.  The main reason people get an "object not  set" or "critical error" is because the permissions on the directory/files are setup incorrectly.  Make sure you check that (needs write access)

2. Can't upload pictures.  Not sure why this is.  There have been a few people who have experienced this with no real answer as to why.  One thing you might want to check is that besides adding the 4.x version files into your website, you also REMOVED any no longer needed files.  (in pariticular in the root directory) there were some files dealing with file upload/storing in a database vs filesystem and needed to be removed during one of my upgrades (4.1? to 4.2? or something like that)

3.  Forum stuff.  Sorry can't help you on that one.

Solution:  I went back and looked at the code some more and added some additional error checking.  In particular if the filesystem permissions aren't set correctly I now log the error to the system/event log and improved the error message on screen slightly to at least be an error message, which should help in debugging the problem.  Also, for the file upload, the code checked for upload errors, but it redirected the user to another "page" before it could show the user the errors, so I fixed that so you can actually see if there were any errors during the file upload. 

So my suggestion would be to try out the new version (2007.04.24) and check the error logs and lets go from there.  As usual it is at my website:  www.Jegers.com