Just to follow up. I got it working. It seems to be a caching issue with the .js files I think. I had the site behind cloudflare and I did a purge there and also cleared the browser cache and it is working now.
So I think maybe cloudflare where sending an old js file maybe to the end user.
So if your site is behind a reverse proxy cache try purging it also.
I am having the same issue for the past week except it doesn't work with Firefox, Chrome and Internet Explorer. But it works with Opera browser on the same computer. All my users are having the same issues except they are reporting it works with one type of browser but not others which may differ from above.
I've tried changing settings in admin, clearing browser history/caches/cookies but nothing is working. Also, I had this same problem before I upgraded to gallery v5.0.2 and I thought upgrading would fix the issue.
The issues is the same regardless of whether I'm using flash or basic uploader. And I've also tried re-caching everything in ip board including skins.
What is weird though is that you can still attach files/images in posts and the uploader works that way. Just not in the gallery section.
See attached image for what we see when trying to upload.