I'm not sure what a Concentric server is, but it sounds like you're fighting something on the server, for sure. (When I Googled "Concentric server" the first result was a mention of permalinks not working in Wordpress.)

I see no reason why a server which can run Zen Cart 1.3.7 would not be able to run 1.3.8, but more knowledgeable people than I might know why.

Perhaps your problem is caused by permissions? Are the files you're trying to change at the right permission level for changing? Is your FTP program setting permissions correctly when you upload files. Is there security on the server which is reverting your changes? You're not using a Control Panel file manager to do your edits are you? Others have said this is a bad thing; I don't know why.

Hope this gets you started.

Rob