The permissions need to be open on this folder so that when you modify the web part XML files get saved into the directory correctly. For a recent client we had to change the permissions so that all users could save the web part. 

I went to the \wpresources folder, right clicked on the flashimagerotator folder and went into security permission for the folder. I set the permissions to be set so that all users can write to this folder. This is required as the web part needs to write/read XML files from this path. After changing these security settings they are up and running.

 One additional note as we have several clients running into this... When you save the picture/document library within the web part settings make sure you use a / at the beginning of the location and don't include a / at the end.

For example,

/sites/yourpicturelibrary

Another quick tip is that you can add a text column called URL within the picture/document library and when clicking on an image it can load the URL. Somehow this missed documentation so I wanted to post it here...