How should file permissions be set?

The message here is not that the file permissions are wrong, but that the file you are trying to upload is wrong.

To manually upload a plugin it must be a “Gzipped Tar” file. This will end in .tgz or .tar.gz. You appear to have downloaded the oldGregg plugin code directly from GitHub. Instead, look for the Release file on GitHub, and download the packaged file for the Release applicable to your version.