Can you see the plugins that come bundled with Elgg in the plugin list, e.g. the blog plugin? And can you activate and use these plugins? If yes, your mod folder is fine and there should be no reason that you couldn't add other Elgg plugins to the mod folder.

The path to the mod folder depends on where you have installed Elgg on your server. The path examples given here are just examples to illustrate where a plugin would have to be when installed at the right place on the server, i.e. /path/to/elgg_install_folder/mod/plugin_name for a plugin named plugin_name and with the start.php of this plugin at /path/to/elgg_install_folder/mod/plugin_name/start.php and not for example at /path/to/elgg_install_folder/mod/plugin_name/plugin_name/start.php (where it might end when extracted wrong and then Elgg can't find start.php and does not accept this plugin as valid plugin just because it's installed wrongly).

If you extract a plugin zip directly on the server (e.g. with CPanel's File Manager) the permissions and ownership of the files should be kept intact and then it should work. Whereas extracting a zip on Windows will not keep the permissions of files intact as Windows just can't deal with Linux permissions. Uploading the files then with FTP to the server will likely set some default permissons but these defaults might be wrong. Therefore, extracting the zip on the server is the better way if you can't fix the permissions of files and directories on the server easily.

I don't know what else to say to explain this any better. It's simple actually and there are not many problems that could occur if done right. How have you installed Elgg on the server? You would need to have installed the files of Elgg on the server in some way, too. Adding a new plugin in the mod folder of Elgg on the server should work in the same way.

Maybe Elias managed to solve the issue in the meantime. At least he asks about how to resolve plugin dependencies in another thread now (which seem to indicate that at least one plugin showed up in the plugin list by now). It would be nice to know then what the problem was.

@Tom I don't think that a corrupt file or a problem with underscores are likely reasons for the problem. Which OS would have issues with underscores?