Yeah I think that's the permissions issue, I ment to post the picture with the error and forgot to, sorry, let me put it up now. I do have it in the correct directory as well.
Ok, try this. Copy the bitcoin.conf to bitcoin.conf.tmp
then rename the bitcoin.conf to bitcoin.conf.sav
and then rename bitcoin.conf.tmp to bitcoin.conf
Then try to launch as server and see what happens.