Regarding permissions, I had a similar problem running Distiller off a G5 OS X 10.3 Server at the start. We overcame these problems by making sure the watch folders location was in an area on the server where the permissions convert all files to read/write for everyone (first problem).

The other problem I found was running Distiller in this fashion on a G5 Server. I moved Distiller to a G4 computers and pointed Distiller to the watch folder stored on the G5 Server. End of problem for me. Distiller and G5 computers expecially G5 Servers I havenít had many good experiences of late.