This is serioulsy frustrating.
In the latest release of K2, I am using the built-in item/image/ tab to upload an image i need for the site.
Once uploaded i cannot access the image in the image gallery tab or media manager.

Where the heck is it and why is it not accessible in any of the media. image managers??

I even purchased the simple image pro plugin in hopes that this would solve the problem but it was not (it cost me $17.50 to find this out).

Where and how do i access the images uploaded?

The item images are just that...images for displaying in custom divs thru category_item.php and item.php. They serve as a way to have quick formatted content. the actual items are stored here:
/media/k2/items in folders cache and src
You can refer to them there with custom links but they have special names and are intended to be used with the items and category paramaters within k2 and within the item.php

The gallery does the same thing, associates a zipped directory of jpg's into a specific item for display there

You are also able to use the regular editor to insert jpgs