Hello, I would like to post an answer on this topic www.joomlaworks.net/forum/k2-en/46627-image-upload-issues
But, I could not find the answer button (!)

I experimented same issues about using tab Image, same error message "The image was not uploaded. Please ensure that you used a valid image file and that file uploads are properly configured on your server".

I am also running with K2 v2.7.1 / Joomla 3.6.2

The problem was in the path of the image. One folder name had space.

images/Team Challenge/myImage.jpg => Does not work
images/TeamChallenge/myImage.jpg => It works !

I hope this could be helpfull...

Thank you so much for reporting this Christine :)
I 'm glad you found the culprit.