You are not the only one with this problem (same module and simpleviewer).
Thumbnails folder and xml file are created, but no photo gallery (just "loading xml data").
I can get it working on localhost on my development machine.
When trying the same on our dedicated server I am getting the same symptoms as you. Have tried with DNN 311, 320 and 322. I have the newest flashplayer, and have tried with IE, Firefox and Opera. On firefox the bottom statusbar says "looking up portals..." when viewing the page.
Our production server has windows 2003 and plesk control panel, the DNN setup is pretty standard.
Hope the problem can be solved.