Folders also have to be executable (777) in order to work, looks like your folder permissions above are 666.

You need the backticks in the config file. You need to call str_replace(’`’, ’’, $dbase) when you use it where it doesn’t need backticks, though I can’t think of too many places it should be used without them if you want to avoid MySQL errors with certain characters that are allowed in db names.
@Susan & Open Geek: I added $dbase = trim($dbase, "`"); after the config file is included. I already took the backticks out of my config files on all my installations (because of this problem) so I can’t tell if this is a proper solution. Is this what you two would suggest?
Not sure which is better, but a quick test in a php file would probably tell us which is faster... Likely, your trim approach is fine and probably a little faster.
Is str_replace better in this case than trim()? I always use trim($dbase,’`’) in my scripts that need this.
Andreas, for some reason your system is having a problem with the uploaded file. Have you been able to upload other files using scripts? I’ve used this on a local MAMP server as well as a standard Linux shared-hosting server with no (other!) problems.