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You need to have the data directory set to 777 for uploads to work.
I cant tell you how to make it work as 755 as I am not a server host and do not know the specifics of what needs to be set on a server to allow that. I just know its possible. your host may know how to do it to allow file uploads etc without directories being 777 but for 99.9% of servers they need to be 777.
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