It is an external system library that your host has to maintain, it's possible it was removed (even in favor of the built in GD).

There should be a test script in the Control Panel for the General Display Captcha Configuration that would test generation.

I am a Web Development Contractor, I do not work for UBBCentral. I have provided free User to User Support since the beginning of these support forums.
Do you need Forum Install or Upgrade Services?
Forums: A Gardeners Forum
UBB.threads: UBBWiki, UBB Styles, UBB.Sitemaps
Longtime Supporter & Resident Post-A-Holic
VNC Web Services: Code Modifications, Upgrades, Styling, Coding Services, Disaster Recovery, and more!