If you create the directory over SFTP the permissions should be fine (chmod 700 or 750).
The ionCube installer will rewrite your php.ini so if you have any custom edits within it you will need to include them after you run the installer. Considering you’ve already used a wrapper you should also check your .htaccess file to ensure it has been edited correctly as well and that no traces of the old directives are left. It might help to set the domain to use regular CGI within Panel before running the script (the installer sets the domain up to use a custom FastCGI).
After making changes to your php.ini, run the shell command touch dispatch.fcgi in your cgi-bin folder so that the server reloads the dispatcher, then check phpinfo() to make sure everything is as you want it.
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How To Install PHP.INI / ionCube on DreamHost