The permission on the image folder will need to stay fully writeable if you want to be able to upload new graemlins/icons/etc via the control panel.
As for the user that it's stalling on. It's hard to say for sure. If you open the users file in the members directory with an editor is there anything out of the ordinary in it? When you say it stalls does it stop immediately or just sit there for awhile.
It could be that it's encountering an error but PHP isn't configured to show errors to the browser. You might check you php configuration and see if display_errors is turned off.
