I took a file that worked and one that didn't and did a hex dump to spot if there was a funny in the file descriptor bytes.
There is. The jpegs produced by the camera on the XDA contain an addition EXIF header block at the start. The LJ uploader appears to see this and says 'No that doesn't have a JPEG header, so it's not a jpeg file.'
The solution is to use PocketPainter to resave any pics I want to upload as 'clean' jpegs.