I've spent the last few days playing with vsFTPd, trying to figure out how to correctly create users that will actually log in, and trying to figure out permissions. Quite frankly, im lost. Any suggestions? :/

Don't all start posting at once.

Have you checked with their documentation http://vsftpd.beasts.org/#docs . You might find some assistance in there.

Yes, I've checked. I haven't been very successful though. Maybe it's just me but it doesnt mention my problem within the troubleshooting Q&A

Maybe you could try some FTP server instead. Seems like no one is using vsftp here.

I would guess that most people here are using proftp or pure-ftp on Linux since those typically come with the control panels offered at SM.