Ok, solved!
I'm not sure what exactly happened, but i deleted my DigitalOcean droplet, and created a new one.
This time i manually changed the file permissions from FIleZilla. I changed the folders "downloads, uploads,languages" to 777, and also checked this is applied to their sub files.
It works now. I guess the issue was file permissions.
(a small doubt - is changing these files to 777 insecure???)