Operating system name and version: Ubuntu 10.10 Desktop x386
Version of smsd: 3.1.10
Smsd installed from: repository
Name and model of a modem / phone: Huawei e1552
Interface: USB

In a previous post of mine, I was able to resolve the issue by changing the folder permissions to 777. I'm thinking that perhaps it's because the smsd daemon is using a different user as to what the folder was originally set to.

Would anyone know what user should own the folders in the /var/spool/sms folder?

In my case admin owns all these folders.

Output of ls -l command:
drwxrwxrwx+

kyutums wrote

Would anyone know what user should own the folders in the /var/spool/sms folder?

It depends on how you have started the smsd.

If you start it directly from the command line (not recommended), smsd inherits privileges from the user who started it. By default /etc/init.d/sms3 scripts does the same.

If you use script from Debian/Ubuntu, /etc/init.d/smstools, that script will read settings from the /etc/default/smstools file. By default there are settings USER="smsd" and GROUP="dialout". In this case all spool directories should be owned by smsd:dialout, and in usual cases outgoing directory could be world writable. Note that smsd will change user and group settings only when started by root (or system startup).

When smsd is running, there should not be any errors in the log file. All directories are checked during the startup, and if some directory is not writable for smsd, error is shown and smsd will not start. Of course, after smsd is started, permissions of directories should not be changed. If you still see some errors, show the error here and also show what smsd said about "Running as" when it was started.