22ab14a created the issue

I have hosting with Webfaction and plan on using the Rackspace CDN to serve image files.

To do this, I created a tar.bz2 of my home directory at webfaction. I downloaded this to my laptop and then extracted.

I established a connection with Rackspace using the preset favourite and the Rackspace API.

I dropped the img folder into a container I made in Rackspace and I was told 'upload failed'.

I then created the img folder within cyberduck and started individually adding its sub-folders. This worked until I hit one folder called 'p'.

'p' folder contains the main images for my site.

Part 2.

When I add 'p' folder by itself, all the directories are created and even the file name. eg: /p/1/0/0/0/1000-thickbox.jpg but the file is 0bytes. However, when I grab that file from my laptop, I'm able to drag it to its directory on Rackspace and it uploads fine.

Do you have any idea what could be causing this issue?

I have preferences for uploads set to change permissions to these permissions for folders:
Read - Ow/Gr/Ot, Write - Ow, Execute - Ow/Gr/OT.
For Files:
Read - Ow/Gr/Ot, Write - Ow, Execute -