Does the php installation on your server restricts access to the filesystem using the open_basedir php config variable? If that's the case, setting the permissions of the directory to 777 is not enough. The webserver would be allowed to access the directory due to the permissions but php scripts are blocked from accessing the directory because the directory's path is not included in the list of allowed directories of open_basedir.
You might want to check the php.ini of your server, if open_basedir is used to restrict access and change the configuration. If you can't modify php.ini on your server, you would have to ask the support of your webhost about it (and you might need to choose another webhoster if they use open_basedir and don't allow modifications in php.ini - as free hosters might do).
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