It seems that NetPBM suddenly stopped working in my Gallery2 installation. Did the path change? Which path is the correct path. Mine had been set to /usr/local/.

Here is the debug output from the Test Settings option:
is_dir(/usr/local/)
file_exists(/usr/local/pnmscale)
Loading plugin netpbm
netpbm plugin successfully instantiated
Check the version of the netpbm plugin
The version of the netpbm plugin is ok
file_exists(/usr/local/pnmcut)
file_exists(/usr/local/pnmfile)
file_exists(/usr/local/pnmcomp)
file_exists(/usr/local/pamcomp)
file_exists(/usr/local/pnmflip)