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Ok, those two directories need to be OUTSIDE root, as explained in the read-me...
Move xoop_lib and xoops_data to the same place as you see the public_html directory.
public_html
xoop_lib
xoops_data
Not
public_html/xoop_lib
public_html/xoops_data
Having done this, you will need to edit mainfile.php to show the new path of these two directories.
All this is explained in detail in the readme file that came with the upgrade.