Thanks for the replies!
FTP Mode - my first post was mistated; I ftp'd the files in BINARY mode, not ascii. Automatic mode switched back and forth too much, so I set it to only upload Binary.
.htaccess - The only thing in my .htaccess file is for directory listing restrictions. However, if it was the .htacces file, wouldn't affect all the directories in the /photos/ dir? Right now, it only affects most, not all.
Case Sensitivity - The script that generates the urls actually uses the folder name and the image name and writes them as a string. So the names should literally be correct for any file in any dir/subdir/
Don - you hit on the issue in the second part of your post. The images are there, but for some reason aren't available to the webserver or anything requesting them. There are not htaccess files in these subdirectories, can you think of any other way they are being restricted/forbidden?
I appreciate the welcome, it's good to be part of a forum where people actually post replies! Thanks again!