That's nuts. Let me look into the Smarty documentation.
to give you more specific information:
i'm hosted with liquidweb
the issue is specifically group-write and world-write permissions. when i upload a web-app, it defaults to 755. the tpl and tpl_c folders have to be 777. the rest of the folders are fine at 755 (although i haven't tried uploading images for resources, the uploads folder may require 777 as well)
if the tpl and tpl_c folders are set to 755, firefox pops up this message:
Firefox has detected that the server is redirecting the request for this address in a way that will never complete.