Hi astral-projection!
I cannot help you with your first problem, but I have your second problem too! It seems that the N900 cannot handle the biggest images, but you can use a trick to avoid this problem. You can simply go to the Photos viewer, open a photo, click on the resize button, and then crop the part you want manually. I know it's a bit annoying, but I can't find a better way, I hope someone else can!
P.S: I agree with you, the installable app memory could be more!