I took this error either while I was setting up first.
Then I resetup it but after I upload the files and directories I did chmod prperties first then I continue with the setup. And I have no problem that second set up.
I also tried my first setup changing chmods after setup But I had error too, I think try to set up again, first upload files and directories then make necessary chmod changings and then continue with the installation. I think you will solve the problem or I wish:)
You can create directories yourself and problem can be solved but temporarily. After creating new category you will have to create your directories manually....
Good Luck