JPEG should have worked fine - I post JPEG attachments nearly every day on the Games boards. But I have noticed that from time to time that error will come up for no explainable reason. However, what I've also noticed is that if you try to post the attachment a second time, it will go through without a problem. Why? Who knows? Ours is not to figure out why the host server doesn't recognize a file at first but does a minute later.
A word of warning, though: if you've written a post to go along with the attachment (which seems likely), be sure to copy it before you try to post the attachment because, if the attachment doesn't get recognized at first, you'll lose the text of your post. That never used to happen in SMF 1, but it does in SMF 2.