Under "Look & Feel" in the site administration, there is a setting called "Image Rendition". When click on that, it tells you that the blob cache is not yet configured:
Configure Blob Cache on the server:
Change the web.config file which is found in the inetpub folder for your site (similar path like C:inetpubwwwrootwssVirtualDirectories80)
NOTE: Make a copy of the web.config before edit!
Go to the line that begins with “blob cache location"
Change the location attribute to specify a directory that has enough space to accommodate the cache size, typically a D or E drive (not the system drive!)
The size is expressed in gigabytes (GB), and 10 GB is the default. Do not set it to lower than that.
"BlobCache location="D:BlobCache" path=".(gif|jpg|jpeg|jpe|jfif|bmp|dib|tif|tiff|themedbmp|themedcss|themedgif|themedjpg|themedpng|ico|png|wdp|hdp|css|js|asf|avi|flv|m4v|mov|mp3|mp4|mpeg|mpg|rm|rmvb|wma|wmv|ogg|ogv|oga|webm|xap)$" maxSize="10" enabled="true"
Save the web.config file and the site will automatically recycle.
Now when you go back to “Image rendition” on the site, you can add a new item: