I tried to upload some images for a story through the fckeditor. It kept churning and churning away so I guessed something was wrong with permissions. I did the following where <domainname> is the actual site name:
chmod 777 /home/sites/<domainname>/web/images/library/File
chmod 777 /home/sites/<domainname>/web/images/library/Flash
chmod 777 /home/sites/<domainname>/web/images/library/Image
chmod 777 /home/sites/<domainname>/web/images/library/Media
This didn't work. In fact, this time I got an ugly pop-up that somewhere in it complained that it couldn't find library/image. Well, I realized that it was saying image not Image.
So I then did the following:
mv File file
mv Flash flash
mv Image image
mv Media media
After this, I was able to upload just fine. This was an install from the 1.0.2 tarball.
So far I have had to do permission changes for mediagallery, the image library, and of course a few other things that were checked initially. I think a script that can be run at the command line for those who have shell access, might be a great addition. I might be able to provide something to you in awhile since I am working on that for my own purposes.
Obviously, doing that through http would mean your server is misconfigured.
I thought you ought to know about the naming of the directories since a case sensitive OS will take issue with it.