The moderation queue appears next to "Reports" in the moderator bar.
You can access it by going to
http://yoururl.com/index.php?moderation-queue/.
If the queue is empty, then you don't have permission to manage media. (You need to be a moderator and have the approve/unapprove media permission).
The images disappearing was actually as designed but we changed it in XFMG 1.1.5; though again if you don't have the relevant permissions then they won't appear.
Try using the Analyze Permissions feature.