I had the same problem and all the above didn't quite solve it. but I managed (after many tries...) to find a workaround.
The issue in my humble opinion is a bug in the way Joomla handle the info provided in the configuration.php file about path to the tmp folder
I run Joomla 1.5.7
This is hosted on a VPS Server Linux (kernel 2.6.9-67.0.4.ELsmp)
Apache 2.2.8 (unix)
PHP version 5.2.5
MySQL version 220.127.116.11-community
The FTP account I created to handle joomla gives me access to the folder where Joomla is installed
the line 31 that informs the system about the FTP root then is
var $ftp_root = '/';
When I run the FTP layer on, in order to be able to successfully modify the configuration.php file the path to the tmp folder must be '/tmp' ie line 61 in my configuration.php file is
var $tmp_path = '/tmp';
Now IF I try to Install and extension package with these setting I am able to upload the package all right (joomla installs the zip file on the /tmp folder - I can see that with FileZilla) BUT I have a very frustrating message
'unable to find install package'
Here what worked for me.
I had to change the configuration.php file to modify the var $tmp_path to the path the Joomla detected for FTP on the first install. for me it was
var $tmp_path = '/home/VPSNAME/public_html/FOLDER/tmp';
where VPSNAME was the name of my VPS server and FOLDER the folder where I installed joomla.
In order to find your path yoopilive posted a solution here: viewtopic.php?f=470&t=215729&st=0&sk=t&sd=a&start=30
once this was done I was not able to modify the configuration.php file in the backend anymore (JFTP errors) BUT Tadaaa!!
I was able to upload and install a package without the 'unable to find install package' error
there is still (at least) one issue with this workaround as you can't modify the configuration.php in the back end with these settings.
* JFTP::login: Unable to login
* JFTP::write: Unable to use passive mode
Maybe a Joomla expert can have a look at this and tell me if there is a better way?
I hope this helps someone....