You're right about my vagueness. Here is what I did:
1. useradd -d /var/ftp/myuser/ -s /dev/null myuser > /dev/null 2>&1
2. created directory in /var/ftp/myuser
3.edited /etc/shells file to include /dev/null
4.edited /etc/passwd to read:myuser:x:502:502::/var/ftp/./myuser/:/dev/null
5. I then set the permissions as described here:
What else do I need to do? As I said earlier "myuser" can get in ok, but he can navigate outside his directory. How can I check to verify the permissions are what they need to be and trap him in that the respectable directory?