Did you try to enable GD in order to use GD as image library. I don't know if this will solve your problem, but it can be the reason why you get this message:
[ Dec 13 2007 15:59:17 ] eZImageManager::convert:
None of the handlers can convert MIME-Type image/jpeg
You been disabling ImageMagic, and if GD isn't enabled you will have no convert handlers enabled.
