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pretty much what all the mce users are getting.  The editor itself works fine but the advanced link and advanced image plugins require a permission check.  That's where the issue seems to be.

Denon wrote:Hey, all files in patch archive from 1.0.7 to 1.0.8 (tar.gz format) have chmod set to 755..  why not 644??

It wouldn't matter what they are, if you are uploading by ftp then the server should change them.  If not, just use Joomlas global permission change.