SharePoint 2003 Exporter vs. 2007 Importer XML Syntax
I'm not sure if this is an importer issue or an Exporter issue, but there is a descrepancy in expected syntax for the struct.xml document. The exporter outputs create which makes the importer choke. Modifying the xml and capitalizing the Create value seems to fix the problem and allows the import to proceed. ex: Create
To upload designs, you'll need to enable LFS and have an admin enable hashed storage. More information