The permissions error point to a problem with the ConfigUserFilesPath setting.
this path is site relative to the folder the files should be uploaded to to. for exmple, if the images should be uploaded to:
set that to:
ConfigUserFilesPath = "/userfiles/"
Also make sure that the permissions on the userfiles/ folder at:
allow for write permissions for all users. You may need to create the Image folder manually inside the userfiles folder.
For the problem with the icons, edit the iRite instance, on the general tab, make sure a skin is selected, then click OK and re upload all of the files.