hackersoft
ftp is not secure, that's why sme developers do not enable ftp functionality by default. They would prefer to take it out of the distribution completely.
Far better to use sftp as a minimum.
The advice you have given about editing templates directly is bad advice and is not the recommended method.
If you must use ftp and wish to make config changes via templates, then you should be copying the template fragment to the templates-custom folder, making your changes there and then expanding the template.
This way any changes you make can easily be undone (by deleting the custom fragment & expanding), and also the changes will survive upgrades etc.
Revised instructions based on your original
1. Access your SME box via Putty or WinSCP and login as root
2. Go to the directory:
/etc/e-smith/templates/etc/proftpd.conf
3. Look for a file like 10LimitSiteChmod
copy that fragment to
/etc/e-smith/templates-custom/etc/proftpd.conf
You may have to create this folder first
mkdir -p /etc/e-smith/templates-custom/etc/proftpd.conf
cd to the newly created fragment
cd /etc/e-smith/templates-custom/etc/proftpd.conf
4. Edit the new custom fragment 10LimitSiteChmod
5. Change the word Deny from DenyAll to Allow as in AllowAll
6. Access the server-manager
7. Click on Reboot or Shutdown
8. From the drop-down list click reconfigure (this will expand the templates & reboot)
9. The SME Box will reboot with FTP CHMODding now allowed
10. Good Luck!