I took a quick look at it, and yet it is very ordinary, anyhow I couldn't see any "Insert" or "New" command any where, was that something you were trying to implement.
With regards to the images, you would hvae to change the eval paths in the productList and productDetails aspx files in order to get the images to show in the default page,
I believe the paths goes into the Cataloge folder and uses the images folder and its Thumbs subfolder.
With the Edit command you could set the path for the image you want, but still have to copy a thumbnail into the folder for the correct path in productsList to find.
Personally I did not want to play with this project when I faced the hasle of the "Insert" methode and I just postponed the work on that to free my free time for MVC3 projects.
It does look like the code I started with a long time ago, but my way about it is to do a codebehind for the whole process, the same way it is done for the shopping cart Add and Update
I think it is best that way.
One advise, it is best if you use the entity connection instead of the Datasets and Objects, that will save you a lot of time.
But let me know if you have found a way around to Inserting new items. I have not checked the DB for relations or association yet and I think it is ok since it updates OK.