Hello,
Ok, your original problem, as you figured out, is that SafeMode is enabled (yuck, don't know why hosts find it nessecary to enable it

). Anyways, you found your way around that, I believe.
Make sure that when your using FTP to create a folder, or edit files, that you move to the correct directory first. IE, say you login in your root folder, you need to navigate to public_html and then, say, /subsites/. Here is what you would do (minus the connection code):
Now I'm only about 90% sure that this will work under safe mode, but should it work, a new folder would be created: http://domain/subsites/<SUBURL>. My best suggestion to you, is that you request your host to disable safemode. It will make your life sooo much easier
I hope this helps, and that this code is correct. Good luck and happy coding
Cheers,