Beware of 777 permissions; they are likely a security risk. There are lots of threads on the forum about permissions.
You're on the right track working with file permissions and your config.inc.php configuration file. Check your files_dir to make sure it's correct. If you have shell access, use "ls" to verify the location:
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If it's correct, you should have a few files listed e.g. journals, site, etc.
Public Knowledge Project Team