So basically, I have this 2.5GB file that is in a .gz form and cant be download via the HTTP protocol. So I tried to setup a Anonymous FTP account but im confused on how to do it.

what i have so far:

<Anonymous ~domain.com/html/downloads/folder>
User ftp
Group ftp
UserAlias annyftp folderftp
MaxClients 10
RequireValidShell off
DisplayLogin welcome.msg
AllowOverwrite off
PathAllowFilter "^[-A-Za-z0-9._+]*$"
PathDenyFilter "(^|/)[-.]"
AllowFilter "^[a-zA-Z0-9 .,/_+\-]*$"
Umask 0227 0227
<Directory *>
<Limit RMD DELE SITE_CHMOD RNFR CWD STOR>
DenyAll
</Limit>
</Directory>
</Anonymous>

then for accessing the file to download, i do:
ftp://FTPUSER:FTPPASS@domain.org/

but so far i've had no luck.

do you have a user "domain.com" the ~ in front of that path indicates to proftpd that it's the home directory of the first element in the path. For example if you had:

<Anonymous ~ftp/files>

It would look up the user ftp in /etc/passwd and see where user ftp's home directory was and then append /files on to the end. So if user ftp had /home/ftp for its home directory then the path would be /home/ftp/files