Latest stable release is actually 4.6.3. Yay! =) And you should probably be running PG 7.2.4. I believe the PG upgrade is very straightforward.
Regarding your problem, you need to have ImageMagick installed and have the ImageMagickPath package parameter set to the absolute path of the ImageMagick executables.
You should also consider using Jeff Davis' version which has various enhacements.
