That is such a small file. Their isn't any file settings we have that would prevent that upload (unless you changed the file size settings yourself to something smaller or the file doesn't have a proper image file extension like jpg, gif, png, etc)
I have seen directory permission checks like we use in the Environment Check run into issues on some hosts and report false positives or negatives (not sure why). This happens in other CMSs as well.
Anyways can you manually check your file permissions for the images directory and all folders beneath it? You will need to log in via FTP and make sure these directories have a permission of 755. The files have permission of 644.
Check out this article for instructions on how to do this (it is not a Geeklog article but the process to change permissions via FTP is the same)
https://www.wpbeginner.com/wp-tutorials/how-to-fix-image-upload-issue-in-wordpress/
Sometimes the user you log in with for FTP is different than what the website uses to access the files so this may not work. If that is the case then you will need to contact the host (but this is usually not the case).
One of the Geeklog Core Developers.