This is a general ftp repository configuration error. It could mean that there is an issue with User Permissions on your ftp, pointing to a wrong (home) directory, etc.
For this issue I would suggest to upgrade to HPDM 4.7 SP-2 as in the Repository Configuration dialog the Test Button was enhanced / it does more tests to check against. Also there might be some enhancements/fixes for your need? ftp://ftp.hp.com/pub/hpdm/Documentation/ReleaseNotes/
Otherwise can you use a ftp client and connect to the configured ftp in HPDM and see if it shows the correct directory and if a file upload works?
There is a section about "Validating the Configuration" in this White Paper:
ftp://ftp.hp.com/pub/hpdm/Documentation/WhitePapers/4.7/WP_HPDM4.7_Repository_Management.pdf