The uploaded file exceeds!

A php.ini in your WordPress directory has no effect if PHP is running as a service, not per CGI or FastCGI.

Find the php.ini in your PHP installation path, adjust the values there and restart PHP and your web server.

So … until here this was off topic because general PHP questions belong to Stack Overflow. 😉

But:

memory_limit = 32M

That’s very low for WordPress. Just think about an image that has to be resized – this will probably not work if the image is rather big. Translation is rather expensive too. I don’t many German blogs which are able to run with such a low value.

Set this value to 128M or more.