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XF 1.0 The uploaded file is too large for the server to process

#1
When I go to upload an image I get the following error "The uploaded file is too large for the server to process".

I changed my PHP.INI and modified the following:
post_max_size
memory_limit
upload_max_filesize

I also doublechecked my settings in the admin area. I also attempted to change the .htaccess by adding php_value upload_max_filesize 8M as was siggested in another thread..
My folder is writeable.

I am using a VPS. I researched the forum and attempted everything I coud find to try. I am assuming it is on the server side the problem, but am not sure what to do or check at this point. Any ideas? Thanks.