Using Drupal 5.2 and having the same issue described here: http://drupal.org/node/127773. Seems its a PHP comiling issue with readdir(), which my host is unable/unwilling to fix.

The user "radagast" claims he rewrote the file_scan_directory function in includes/files.inc using scandir() instead of readdir(), to at least fix the issue on PHP5... As I can't contact him directly through the forum, I was hoping there was someone out there could help and provide this changed source code?