Here is a quick tip if you encounter this error while installing WordPress plugin on upgrading plugins from WordPress admin interface.
We across this nasty error while working on a Windows hosting with Plesk interface.
Error: Download failed. Could not create Temporary file
I had given recursive 777 permissions to wp-content before this and still got the error.
The easy fix was to change the WP_TEMP_DIR setting in wp-config.php from
Hope you found this useful! Check out our Top WordPress Plugins for some really good plugins you could use for your blog.