GD2 isn't working...

[eluser]appleifreak[/eluser]
Okay I have been attempting to find a solution to this for hours now and I still can't find one. I noticed one post, which does address the issue:

http://ellislab.com/forums/viewthread/87083/

However, one little problem, which I did post:

A) I used to fireworks CS4 to create the images
B) I tried to run through PS to see if that did anything and it didn't

The only thing I can think is that iPhoto is on the mac, and I am on a mac. Will that maybe effect the image type?

Just to be clear here's the error:
The path to the image is not correct.
Your server does not support the GD function required to process this type of image.

And here's my code in my custom library:

Code:

function createImage($msg) {
    $CI =& get_instance();
    
    $config['source_image'] = 'http://rpg.antiradiant.com/media/images/UI/nav/hov.jpg';
    $config['new_image'] = '/media/images/UI/nav/'.$msg.'/hov.jpg';
    $config['wm_text'] = $msg;
    $config['wm_type'] = 'text';
    $config['wm_font_path'] = 'http://rpg.antiradiant.com/media/other/CenturyGothic.ttf';
    $config['wm_font_size'] = '14';
    $config['wm_font_color'] = '000000';
    $config['wm_vrt_alignment'] = 'top';
    $config['wm_hor_alignment'] = 'left';
    $config['wm_vrt_offset'] = '18';
    $config['wm_hor_offset'] = '21';
        
    $CI->image_lib->initialize($config);
    $CI->image_lib->watermark();

}

And lastly, the path to the image is correct and the file permissions are all 755 and media is a folder accessible from the browser.