A bit dated! -- This tutorial covers combining apache and nginx to serve sites with more speed. This article takes you from a fresh DigitalOcean droplet to one where apache and nginx are configured to work together.
In case anyone else comes along, I had the same problem using Apache 2.4.6 (Ubuntu). It had to do with apache not having permission to /usr/lib/iipimage-server. I simply copied that to /usr/share/iipimage-server and adjusted the path in iipsrv.conf and the url worked.