Without seeing the actual error message I can't help you.
Check your error logs.
xampp\apache\logs\error.log
You can't change permissions on a directory in Windows if it is grayed out, only on individual files and there is no need even to do that in XAMPP - I take it you are using XP Home but you didn't say, as there are many restrictions that are not evident in XP Pro re administration facilities.
Apache on Windows has no means to change any Windows file or directory permissions at all, period, so that area is now closed - only on *nix systems is this possible - you need to address your issues with file permissions on Windows installations with the script's authors not here on XAMPP.
[EDIT]
I have just perused the Smarty site (
you obviously have not) and everything you are trying to do, but failing in, is outlined in much detail through out their site - so the Smarty site is the place to get answers for your issues.
BTW Apache will not write to any file or directory outside the DocumentRoot directory, for security reasons, and if this directory that is giving you permission issues is out side the DocumentRoot then
Buckley's - but as I pointed out above their web site has all the answers you need.
[/EDIT]
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