Hey,
Here's what I have:
-------------------------
*[Dir_with_pictures]
...
*[Another_Dir]
*[Sub_Dir]
*[Sub_Dir_of_Sub_Dir]
--------------------------
if I put
no_upload.txt into every one of those dirs the following happens: In any top level directory such as Dir_with_pictures, everything works fine, but in directories that contain subdirs - it doesn't not... In upload page those dirs are still visible in Category selection, and it's still possible to upload in those directoris and any subdirs they contain eventhough there's a "no_upload.txt" in every single one of them.

tried to look at the code.. i'm afraid i'll mess up the whole thing if i'll start fixing it :-/
tried searching forum/readme files.. nothing.
Thanks,
Alex
(I hope I explained the problem clearly)