Some days I'm not sure what I'm doing either. ;)
Although I'm getting a "failed" response after downloading/uploading the dat file to the server the file still appears in the folder. Go figure.
Now, this morning I went through the exercise in my WP admin, hit the download button "Download New GEO IP Database" and it worked. No error message.
Pascal mentions in his FAQ notes the GEOIP Lite may only allow a certain number of downloads from servers in a 24 hour period as follows:
Why does downloading the GeoIP.dat.gz fail?
For instance Maxmind limits the number of downloads per day. They probably do this by IP address so if you or somebody else who has a site at the same server your site is running on already downloaded the new database you may be blocked for 24 hours by MaxMind. No worries try a day later again.
So something having to do with download excess may have been the problem with my host. I had the problem with the first download so it wasn't too many downloads on my side, except after attempting to make it work several times.
So waiting over night seems to have worked. Now the question - I have a number of sites on the same server. Will this problem occur again? If it does than implementing the fresh database to this plugin on multiple sites may take many days.
Regardless, the problem must have been related to Pascal's post on downloads.
Thanks for your help, it's appreciated.