Sharing is helping.

We offer you this space to share your knowledge about Magento and learn from our experienced customers.

    Just an addendum to that, the helloupload does appear to have uploaded most of the hellocanvas theme... the specific error above is:
    C:xamppxampphtdocsmagento1mediahellouploadhellocanvasthemeappcodelocalMage) [function.dir]: failed to open dir

    If I look on the server I see a folder
    "C:xamppxampphtdocsmagento1mediahellouploadhellocanvasthemeapp" but inside that folder there is no "code" directory... only a design directory.

    So it is copying over, which suggests rights are fine... are you sure the install.xml is correct?