I do not believe it is a folder permissions issue.
I only have the problem Zenphoto folder named gallery.
trageser.us/Gallery is the only place where I use the Zenphoto product. Zenphoto created a subdirectory(folder) named 'albums' within the Gallery folder which contains the image files and additional sub-folders with images that used to be displayable using the Zenphoto php functions. Something has changed within Zenphoto that prevents it from operating as it did 6 months ago.