Some good information, thanks. The documentation should say to make sure that the new files and directories are readable by the Web server. I'm not sure how to say this in a way that would be true for all platforms. Maybe just "make sure the files and directories have similar permissions to the other files and directories in $CFG->dirroot." Maybe someone can suggest a better wording.
If you are on a Unix system, then the the permission of newly created files and directories is controlled by your umask setting, which could be different for different users. For example, let's say you installed Dragmath as root and your umask is 066. Then the icon file would be created with permission 600 and would be readable and writable only by you, not by the Web server.