Hi,
It may be a file permissions issue, you need to ensure that the "IUSR" account for your site has read access to the image file.
To do this -
R-click the file, Properties, Select the "Security" tab - you will have a list of users who have access to the file. A quick check is to add "Everyone" with read priviliges. To keep it locked to your ASP.Net instance only you should start IIS Manager, r-click your app pool and the Identity is the user your app runs under.
Ref:
http://stackoverflow.com/questions/7636805/parameter-is-not-valid-error-when-creating-new-bitmap[
^]