Try using "ppm" from a Dos Cmd window, rather than PPM3, which is installed to the start menu by default. This has solved an issue for me which seems very similar to the one you have encountered.

If this doesn't work, try posting to the ActiveState ppm list

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In reply to Re: ppm giving "Permission denied" error by rinceWind
in thread ppm giving "Permission denied" error by cagaw

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