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Oh well, time to start the usual game of shouting at the hosting company whilst gently persuading the client they should have gone with a decent (i.e. no the cheapest you can find) host.
Just as a guess, the DW => Sun Solaris situation, with all the configurations DW can have, and the server too, maybe its a compatibility thing? It may be DW, or something out of its control. I;m sure someone on the server end will have a good explanation as to why something (supposedly simple like CHMOD) isnt working through DW.
they probably log your access, see if they can trace when you were trying with DW. If they cant see anything, then its most likely DW.