I am new to K2 and I'm experimenting with it's features. I have a test article in which I am trying to add an image gallery. When I clicked on the Image Gallery tab on the article, it stated that I needed Simple Image Gallery installed. I installed it and made sure both parts of the plugin were enabled. I still get prompted to install the plugin even though I've installed the software. What have I missed?

Its simpler to get Simple Image Gallery Pro, works off the start line.
If you prefer time and effort, goto forums and search for simple image gallery
there are many posts there.