Thats right your trailing on someone else's post so I know I never told you that directly which is why you threw me off
. Yes if directories are not 777 files cant move. This would be the issue of someone who did not follow the installation instructions correctly. It's probally the single most common support responce next to cookie settings. Here are the installation instructions http://www.photopost.com/installphp.html
Now on to your questions!
Yes subdirectories are created in those directories that would be correct. A numeric identifier for the categories under data and in uploads the user userid. Not uncommon as the top 3 gallery programs I know all do the same and are incompatible also with safe mode as a result from what I show.
As far as how PHP moves or uploads files ALL file uploads go through PHP's tmp directory then are moved to wherever. This is just how PHP works. You never see this error unless you dont have permissions set right. You know how when you install programs they say certain directories need to be 777
This is why in most cases
Now unless there are any other support issues that have not been answered our requirements clearly state safe mode must be off on the requirements page. That said there is nothing more of a support nature I can add here.