Maybe the upload from server did not work because permissions where NOT 777 as I stated in my reply. That is one of the first things I did was correct your permissions.
As far as the flash uploader I can not provide a solution as it does not work on all servers and since we did not write it we can not really fix it. It is an option we include in the software for users to use if it works. It can be turned off. For instance I know for a fact that if a server uses mod security then the flash upload will never work. That is one thing I have seen in the past.