If I understand you correctly you're saying that in that screenshot I posted, on your phone BOTH radio buttons are selected? That would be a problem because of course radio buttons are mutually exclusive - only one should be selected.
It sounds like your SD card got corrupted. You could try looking for your lost pictures in a LOST.DIR folder on the SD card. Perhaps shut the phone down; remove the SD card; put it in your computer and run a file recovery program on it to see if you can find the missing files.
When all is said and done you should reformat the SD card in the phone.
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