This is an all too common issue with Joomla sites and ANY extension that needs to create and use a temporary folder to do file manipulations. Usually the hosting provider will have a very restrictive open_basedir definition to the point I've seen Joomla installs fail due to this.
This is from Joomla,
Consider Using PHP open_basedir
You might consider enabling open_basedir. This directive limits the files that can be opened by PHP to the specified directory-tree. This directive is NOT affected by whether Safe Mode is ON or OFF.
The restriction specified with open_basedir is a prefix, not a directory name. This means that open_basedir = /dir/incl allows access to /dir/include and /dir/incls if they exist. To restrict access to only the specified directory, end with a slash. For more information, see PHP Security and Safe Mode Configuration Directives.
open_basedir = /home/users/you/public_html
Additionally, if open_basedir is set it may be necessary to set PHP upload_tmp_dir configuration directive to a path that falls within the scope of open_basedir or, alternatively, add the upload_tmp_dir path to open_basedir using the appropriate path separator for the host system.
open_basedir = /home/users/you/public_html:/tmp
PHP will use the system's temporary directory when upload_tmp_dir is not set or when it is set but the directory does not exist, therefore it may be necessary to add it to open_basedir as above to avoid uploading errors within Joomla.
I would recommend set open_basedir to NONE and then use an htaccess file,
Akeeba Admin Tools
can really help with this, to restrict folder access.