I was facing the same issue A generic error occurred in GDI+ on saving while working on MVC app, I was getting this error because I was writing wrong path to save image, I corrected saving path and it worked fine for me.
img1.Save(Server.MapPath("/Upload/test.png", System.Drawing.Imaging.ImageFormat.Png);
--Above code need one change, as you need to put close brackets on Server.MapPath() method after writing its param.
Like this-
img1.Save(Server.MapPath("/Upload/test.png"), System.Drawing.Imaging.ImageFormat.Png);