I had a similar issue the problem was solved by selecting a chmod value of 2777 so that files would inherit the group and not apache since I use SU-EXEC on that virtual Server. what would happen is the folder would get made but no files would move into it. one problem I did notice is that it appears that you may need to fix the permissions every time you create a new category (for the category folder) so that the files inherit properly. This is most likely because of the way I have my server set up but since I am admin and can get to the directories and modify them easily and it is not a big issue for me.
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