Please try using this CVS snapshot:

  http://snaps.php.net/php5.2-latest.tar.gz
 
For Windows (zip):
 
  http://snaps.php.net/win32/php5.2-win32-latest.zip

For Windows (installer):

  http://snaps.php.net/win32/php5.2-win32-installer-latest.msi

And DO NOT apply any 3rd party patches to the sources. And make absolutely sure your php.ini is free of any Zend extensions (Zend optimizer, any caches, etc.)

Upgrading did not help. I run 'make test' and submitted the failed list from the prompt. Also, a copy of phpinfo() from the box is available here: http://www.undeveloped.net/testip.php.htm

Why don't you set the session.save_path in your php.ini?

btw. You have dozens of configure options in your configure line that don't even exist anymore. Pay attention to the list after running configure.. :)

Default session.save_path() works for 2 developers, but bugs out for other 3 (with identical settings set for everyone, and I'm sure I didn't specify session.save_path() anywhere in the scripts).
With these settings in smarty:
var $_dir_perms = 0771;
if ($_make_new_dir && !file_exists($_new_dir) && !@mkdir($_new_dir, $smarty->_dir_perms) && !is_dir($_new_dir)) {
...

Php bugs out when creating a directory for unlucky developers. It sets only executable bit, but no read/write bits (umask for apache user is set to 022 and I've tried setting umask(0664); in the php as well)

P.S. Yeah, I'll go over the config file and clean it up from obsolete packages ;-)

I'm starting to think this is no bug at all, just a bug in either Smarty or in how you use it. It propably does something stupid like uses umask() function.

I've checked smarty and our scripts for umask(), checked shell settings and apache settings for umask(), but none of those exist anywhere in scripts/shell profiles.
This is not only Smarty specific, but also sessions are affected (they aren't created through smarty, but instantiated through our scripts). Php creates an empty session file in '/var/tmp' with no permissions.
I've changed '/var/tmp' ownership to apache user, but php still bugs out on it

You have to come up with short (but complete!) reproduce script for this. Good luck.. :)

Note: That script can NOT use Smarty. (IMO, nobody should use Smarty, ever..anywhere..it shouldn't even exist. :)

No feedback was provided for this bug for over a week, so it is
being suspended automatically. If you are able to provide the
information that was originally requested, please do so and change
the status of the bug back to "Open".

This will actually crash the server due to too many temp files in /var/tmp/

I have smarty save cached templates in subdirectories but this staff is all recorded for no reason in one folder. 
Its billions of files that crashes my server even if I run ls.