The file permissions are the same as were there on lthcwww.
The directory "/var/www/demos/decoding" has permission

drwxr-Sr-x  4 rathi  ipgdemos 4096 2008-08-05 13:56 decoding 

This is the directory structure of "/var/www/demos/decoding"
with permissions.

drwxrwxrwx 2 rathi ipgdemos 4096 2008-07-24 15:03 badimages 
drwxrwxrwx 2 rathi ipgdemos 4096 2008-07-24 15:03 goodimages 
-rw-rw-r-- 1 rathi ipgdemos 1918 2008-08-04 16:25 index.php 

The file permissions for files inside directories "badimages"
and "goodimages" are -rw-rw-r--.

There is no directory inside "/var/www/demos/files" for this demo.

Line 33: Images from "goodimages" are displayed.
Line 41: Images from "badimages" are displayed.

This is a completely static demo. It does not generate any new files.
The file "index.php" just displays the files residing in the directories
"goodimages" and "badimages".