Yes. I solved the problem. It's not a permission problem with the content/ directory, rather it has to do with the PCZLIB function call and PHP upload.
I've since modify the code and managed to get content imported.
Let me know if you need the fraction of the modified code.
I saw another post you have on the forum regading this. You can go to ATutor forum, I have a long thread there regarding the import issue.
Let me know if you need further help. It's a wonderful system, not complete but useable.