Then that means that something is not configured correctly on the server. I don't believe that it's file permissions as 777 is to much (really... it's way to much and shouldn't be done). Getting a 404 error on installation would normally point me to thinking that there's a redirection problem with the server. That could be from a few different sources, so it's very hard to tell what the problem is without having access to the servers access and error logs.
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