I left the Datasource entry uncommented and unchanged in mt.cfg. That is:
If something is wrong with the database configuration, MT fails to connect to a MySQL datbase using the info provided and falls back on trying to use BerkeleyDB. With the default value above, it will also fail. By correcting the value, you ended up getting MT to use BerkeleyDB, as you surmised.
Commenting out DataSource or leaving it with an incorrect value effectively produces the same result. MT will not be able to use Berkeley DB if MySQL fails.
My best suggestion is to try to connect to the database using PHPMyAdmin. My MT tutorial provides instructions for doing this. Try to copy and paste and paste the exact values from your mt.cfg file. The database connection info is case sensitive.
As for the permissions problem, is it possible you are connecting via ssh as a different user than the owner of the directory containing your website?
When you are in the directory containing the website (i.e., you are in the directory that contains the domainname.com directory), do an "ls -l" at a shell prompt. You should see something like:
$ ls -l
drwxr-xr-x 27 username groupid 4096 Nov 7 23:15 domainname.com
The name in the third column is the username of the owner of the directory. In the first column you can see the permissions, drwxr-xr-x. The d means this is a directory. The next three characters tell me that the owner has read, write, and execute permission for this directory. In this context, execute means I can cd into the directory.
The next three characters are the permissions for all other users in the owner's group. The fourth column has a groupid. Any other user who is in the same group as the owner of this directory has the permissions specified by the middle three characters.
The final three characters represent the permissions for all other users on that server.
So, after this long-winded tutorial, the symptoms you have described suggest to me that you are connecting via ssh as a user other than the owner, and are thus unable to write files when the permissions are 755. If you want to have full control, you will need to either connect as the owner of the directory, or leave rwx permissions set for the group (assuming, of course, the username you are using is in the same group as the owner).