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Wanted to test the restore, using Pro version & remote to backup the site and download the files. I created a new directory for the test restoration, transferred kickstart.php & the two backup files. Kickstart permission set to 744 but receiving a 500 internal server error when I try to access kickstart.php.

What are the permission settings on the backup archive? They should be 744 as well. Some servers would throw a 500 error if the permissions were 777.

Yes, permission for backup files are 744 too. Here is the error log from the server
[2010-07-28 07:55:30]: error: directory is writable by others: (/home/mysitete/public_html/li-testing)
[Wed Jul 28 07:55:33 2010] [error] [client 66.163.102.200] File does not exist: /home/mysitete/public_html/favicon.ico
[Wed Jul 28 07:55:30 2010] [error] [client 66.163.102.200] File does not exist: /home/mysitete/public_html/favicon.ico
[Wed Jul 28 07:55:30 2010] [error] [client 66.163.102.200] Premature end of script headers: /home/mysitete/public_html/li-testing/kickstart.php

error: directory is writable by others

I think that is the root problem. Check the middle permission number on the li-testing directory. It must be 5 on this server (read+browse permissions). The server does not allow the directory to be writable by the group.

UPDATE: Sorry, the right number, not the middle number. The error is "other" not "group".