Make sure that the error isn't something that's happening already when you create a new post. Some servers have security settings that disallow adding images in posts. Since WP Stealth Note relies on the existing post editor, it will be affected as well.
A 406 error is caused by the mod_security rule in effect on the server which pretty much assumes that some HTML code is "dangerous".
Luckily, there is a solution posted on how to turn it off via the .htacees file: http://babybean.info/index.php?post=lightspeed-406-not-acceptable
Please contact your hosting support to implement this for you if needed.
Article ID: 96
Category: WP Stealth Note