I couldnt change the permission via the script on account of the owner being different than from the executing script.
However, I did finally figure it out. I used the following line and it works great!
ftp_put($conn_id, $newindexfile,$indexfile, FTP_ASCII)
Since I had no choice but to use the FTP functions for creating the directory in the first place, an FTP function was the answer for copying my index file into the newly created directory.
I can finally move on to the next step...file uploads (gulp!)
thanks