This is the nature of the error: upon viewing any problem in the Demo homework set, WW reported several warnings/errors to do with lines 387, 388, 398, 402, and 410 of ImageGenerator.pm. I looked at these lines in ImageGenerator.pm but I wasn't able to figure out what the problem was.
There were references to LaTeX in that part of ImageGenerator.pm, so thinking the problem was with texlive, I opted to install remove all packages that started with "tex..." and installed texlive-full.
Here are some screenshots of the problem:
Upon first load...

After pressing Ctrl + Shift + R...

And lastly, after one more Ctrl+Shift+R...

I screenshotted from different problems---forgive me---but the error relents no matter which problem I look at (provided that it is WW's first attempt at displaying the problem).
For the record, I also had issues with Library2 unable to add problems to a homework set. I enabled Library1 and was able to get around that issue.
Oh, I don't think there are issues with permissions. I followed the 2.7 Ubuntu manual very closely, although I didn't name my root user 'wwadmin'. Here is a screenshot of a relevant ls:

I am running Ubuntu 12.04 64bit on an OpenVZ (I think) VPS. School starts on Monday... please help!
Thank you..