I don't think you need to create the file that first time; OJ should create it automatically. (It's been awhile since I've done a fresh install, so I'm not sure).

The most important thing that OJ is complaining about in your instance is that the permissions on the file aren't set correctly. That's why it is best to let OJ create it from the template file by itself.

In order to do that, the Web server must have permission to write to the directory where the index file is to be. If it cannot, it will exit with this type of error message complaining about "permissions."

The easiest way to ensure the Web server can write to this directory is to do a "chmod" command on the directory itself using:

chmod 777 directory_name

That should fix your problem.