I just downloaded the DOCman 1.3 component and installed it no problems on my Joomla! 1.0.11 site. When I say "no problems", I mean that there were no problems to install.
But when I tried to upload my first document from the site frontend, DOCman gave an error: Error uploading. - Directory problem:
After playing around for a while, I found the following solution:
1. make sure you actually have the directory dmdocuments on the root level of your Joomla! installation on your server, and that its permissions are set properly;
2. go to the DOCman component, choose configuration and click on reset default for the "path for storing files" setting;
3. make sure you click on Save to save the DOCman configuration (I forgot to do this, and ended up banging my head against the wall in frustration until I figured out what I had missed!);
4. make sure that you have created at least one category and one group in the DOCman componont Management control panel.