Not able to upload images, showing file doesn't exist in server.
If done direct upload, the process doesn't finish.
Please help me to sort this problem

Which version of Joomla! are using, also which version of K2 is installed?
Finally if you have PHP 5.5 in your server then you should try the K2 dev version.

PS. Just in case, you should contact your hosting provider about this issue.
getk2.org/assets/get/