Here is the working code in Python (using cURL):
#!/usr/bin/python
import pycurl
c = pycurl.Curl()
values = [
          ("key", "YOUR_API_KEY"),
          ("image", (c.FORM_FILE, "file.png"))]
# OR:     ("image", "http://example.com/example.jpg"))]
# OR:     ("image", "BASE64_ENCODED_STRING"))]
c.setopt(c.URL, "http://imgur.com/api/upload.xml")
c.setopt(c.HTTPPOST, values)
c.perform()
c.close()
Here's what I have in C#:
public void UploadImage()
    {
        //I think this line is doing something wrong.
        //byte[] x = File.ReadAllBytes(@"C:\Users\Sergio\documents\visual studio 2010\Projects\WpfApplication1\WpfApplication1\Test\hotness2.jpg");
        //If I do it like this, using a direct URL everything works fine.
        string parameters = @"key=1b9189df79bf3f8dff2125c22834210903&image=http://static.reddit.com/reddit.com.header.png"; //Convert.ToBase64String(x);
        WebRequest webRequest = WebRequest.Create(new Uri("http://imgur.com/api/upload"));
        webRequest.ContentType = "application/x-www-form-urlencoded";
        webRequest.Method = "POST";
        byte[] bytes = Encoding.ASCII.GetBytes(parameters);
        Stream os = null;
        try
        { // send the Post
            webRequest.ContentLength = bytes.Length;   //Count bytes to send
            os = webRequest.GetRequestStream();
            os.Write(bytes, 0, bytes.Length);         //Send it
        }
        catch (WebException ex)
        {
            MessageBox.Show(ex.Message, "HttpPost: Request error");
        }
        finally
        {
            if (os != null)
            {
                os.Close();
            }
        }
        try
        { // get the response
            WebResponse webResponse = webRequest.GetResponse();
            StreamReader sr = new StreamReader(webResponse.GetResponseStream());
            MessageBox.Show(sr.ReadToEnd().Trim());
        }
        catch (WebException ex)
        {
            MessageBox.Show(ex.Message, "HttpPost: Response error");                  
        }            
    }
Now, the things I noticed is that when I changed my API key in the parameters string to "239231" or whatever number, the response I got was: "Invalid API key." So I think something must be working right.
I placed my correct API key and now I get a different response: "Invalid image format. Try uploading a JPEG image."
The service I'm using accepts almost every image format, so I am 100% certain the error is in the way I'm sending the file. Can anyone shed some light?
EDIT!!!
It turns out when I upload a JPG image I get that gray box thing. If I upload a big jpg image I don't get anything. For example: https://i.stack.imgur.com/8Y4uB.jpg
When I upload PNG's, the image uploaded doesn't even show.
I'm certain the issue is the encoding. What can I do?
EDIT 2!!!
Now I'm 100% certain that the problem lies in the first line of the method. The File.ReadAllBytes() must be doing something wrong. If I upload a URL file, every works peachy: https://i.stack.imgur.com/clcmZ.png
I wonder what encoding I should use. :S
 
     
     
     
     
     
     
     
    