I just ran into this problem myself. I ended up setting the baseURL of the Media Source to non-relative, and adding a slash in front of the path being output by the placeholder in my chunk. It's a messy solution to what seems to be a rather simple problem.
I can't understand why this issue has been around for so long. There's clearly something slightly wrong with the implementation of phpthumbof, regarding use of the site settings for paths. It shouldn't need manual configuration to show the snippet where to find the source images. When I move my site I might end up having to change obscure settings to get my gallery working again.
I notice some of the devs have partaken in this conversion - has the issue not been officially acknowledged even now?
