There are so many articles that cover this particular topic (both the navigation issue and regards to DNN 4.7) that I feel it is almost insulting to have to write a list of the articles that cover these topics. One thing that should be noted, and it is clearly listed as the first items on the Gallery--The gallery is beta, it doesn't work well, and it doesn't work at all with DNN 4.6 or higher.
So start with the basic note that the gallery module is a beta and the fact the you shouldn't be running it in production, and if you get it to work good luck. http://www.dotnetnuke.com/Community/Forums/tabid/795/forumid/9/threadid/44525/scope/posts/Default.aspx
How about this article that says the gallery doesn't work on DNN 4.6 or higher
http://www.dotnetnuke.com/Community/Forums/tabid/795/forumid/9/threadid/189622/scope/posts/Default.aspx
Here is another article that talks about how the gallery doesn't work on DNN 4.6 or higher
http://www.dotnetnuke.com/Community/Forums/tabid/795/forumid/9/threadid/187044/scope/posts/Default.aspx
Here is someone who asked the same question
http://www.dotnetnuke.com/Community/Forums/tabid/795/forumid/9/threadid/186284/scope/posts/Default.aspx
Here is another person who got the same error
http://www.dotnetnuke.com/Community/Forums/tabid/795/forumid/9/threadid/188208/scope/posts/Default.aspx
And since I think I listed enough items, I refer you to one of the first posters about this question, in which I responsed with the technical details of the problem, how I fixed it in my version of the gallery, and some workaround you might want to try to get it to work.
http://www.dotnetnuke.com/Community/Forums/tabid/795/forumid/9/threadid/183287/scope/posts/Default.aspx
Other than turning off friendlyurls which _may_ work (but will apparently break other modules), there is no solution to this problem other than to wait for the Gallery team to release a fix. Oh, and I guess there is one other solution and that is to not put any images/media in the "root" album, but instead to create albums and put the images/media in those albums.