Cannot Upload Image or Cannot Display Image I am new in using Drupal.

First, I downloaded and installed a Drupal free template on my localhost. Everything works fine.

However, when I duplicated the site from localhost to sharedhost for testing, the image cannot be uploaded nor displayed in the test site when I am adding or editing contents. I went to check with the sharedhost provider, so far, it concludes that "safe mode off", and no error notice nor message is shown in the report.

I copy the reply: 

"I am not sure if the paths set are the problem. I noticed your temporary directoy was set to C:/xampp/tmp and I have changed this to simply tmp for you as well as created the directory on the server with complete read/write permissions. It does not appear to have corrected the issue but will be good to have set down the road.

I beleive the issue is with the way Drupal handles image uploads. Unfortunately, it does not appear their are any error messages being generated or logged when an image is uploaded. This leads me to beleive Drupal is not attempting to generate the thumbnail instead of trying and failing. 

I recommend creating a post in the Drupal forums regarding the issue. I am going to continue to investigate form here but perhaps someone on the Drupal team will have more insight into what could be causing this."

I just try to upload an image in a new content type and change an image in an existing content.  The error log shows:

"[Mon Aug 19 04:44:09 2013] [error] [client 218.102.131.79] File does not exist: /home/jwbb26i2/public_html/favicon.ico" 

We have no idea about this problem. Can everyone help me know or solve this problem?

Thank you very much.
Make sure the directory exists and write permissions are set to 777 (probably 775 on production). 

Check the permissions on site/default/files . You might have to ask your shared host admin for this. If you have ssh you can do chmod 777 site/default/files.