Hi,
About the fatal error
I guess that the gallery is trying to create thumbnails for the images you have.
Problem is that, if the images are too big, it could use a lot of memory which is not right released by the GD Library.
When the thumbnail is created, HikaShop won't retry to generate it so, time after time, all thubmnails will be created.
You can try to use a smaller number of images per page, it we can hope that processing less images won't overpass the memory limit. so you will be able to generate all thumbnails for your images.
About the warnings
It looks like you have an invalid image in your gallery and when GD is trying to open it for creating a thumbnail, it detects an error and try to fix it. For the image "cd_audio_orphic_hymns_b.jpg'" the file is maybe not a real image file or could be a "png" file (so the function can't open the file as a jpg, if it's not).
Regards,