I can't really help you (sorry) but I am interested in how you are going about setting up Elgg, since I would like to try it next year. If you ever get time, could you post some reflections on your process of setting up the social networking system for the rest of us?
This is David Tosh's blog, if that helps. I think he is one of the developers of Elgg platform: http://eduspaces.net/dtosh/weblog/
Kevin - If I get it going I certainly will. As far as the install goes, I was able to set up the correct file/directory structure with a dataroot out side of my main directory. I was able to set the permissions on my folders to meet Elgg's requirements. I went through the rest of the install and no matter what I do I end up getting:
After reading information on the forums the best I can tell is that I need to adjust my Apache settings (something I can't do with my current host).
I've successfully set up a Moodle (http://mrmoses.org/moodle/) and my site is managed by a Wordpress install (http://mrmoses.org), so I thought I had the skills to get Elgg going. I'm still tinkering and hoping I can find the help I need. :)
I know it's no help, but I was curious as well and tried to set it up. It should have worked (I think) but it didn't. It's not exactly a product that's ready right out of the box. If you make any progress, let us know.