6
I'd run with the permissions problem. I doubt that it's a problem with the permissions of directories and files with XOOPS as I'd assume your hosting company knows how to get Fantastico working on their servers, that and Silmarwen said that XOOPS was working itself.
However, sometimes the files uploaded or unzipped or untarred and moved into the modules directories don't match those in the rest of the installation.
Make sure the new modules directories and their files are generally the same permissions as those on the XOOPS directories and files (and the system module).
Also, I highly recommend, after you get things going, to start over without the Fantastico installation. I've seen people have problems with those. Personally, I think Fantastico (and Softaculous) is a great resource for trying out some of the popular PHP apps, but a production setup should be done carefully by hand. Just one opinion.