I know there are a ton of posts about Themes being broken and the error of "file not readable." I came across this same problem. I downloaded a popular theme from this site and unzipped in and put the folder into my wp-content/themes folder. However, when I type in the direct path into the URL the style sheet shows up. So I know the files are there. People have mentioned it might be a permissions issue but the folder is read, write and execute.
Any other suggestions?!