This can occur when the image uploaded is too big for the server to resize, to create the thumbnails for it. This can be because your memory limit is too low and it simply runs out of memory trying to resize the file.

If this is the case, you can look to increase your memory limit on your server, or you can look to change over the image processing library via this dashboard page:
/index.php/dashboard/system/files/image_uploading
If you see a checkbox next to 'ImageMagick Library', you can try swapping to that. If it's not available, you would enable it via the server (in cPanel it's in the PHP section, under PHP Extensions)

Swapping to ImageMagick is a better approach if it's available, as it's much faster than GD, and uses memory more efficiently.

To then try to recreate thumbnails you would click on a file in the file manager, select 'Properties' and click the 'Rescan' button to the top right of that dialog.

On ImageMagick it is showing X sign so does it mean that ImageMagick is not configured properly?

Well it means it's not be detected as available on the server.
It's something you often need to turn on in cPanel (or equivalent). Or you can ask your host if it's available and if they can turn it on for you.

The problem is different

if image is using style having width and height inside it are not tracked
for e.g <img src="/image1.jpg" style="float:left; width:320px; height:240px;"> this image will not be showing usage

but if we change it to
<img src="/image1.jpg" style="float:left;" width="320" height="240">, than it will start showing the file usage.