In tools/data_source/upload.py, about line 216, galaxy attempts to uncompressed gzip'd files in their existing location. In my case, I'm importing files from the filesystem, and telling galaxy NOT to copy the data into Galaxy. The 'galaxy' user doesn't have write access to these files or folders. Galaxy complains about this when it tries to uncompress the files.
Shouldn't galaxy uncompress the files in the database/tmp ($TEMP) folder instead?