dogecoind won't read conf
It's unclear which version of dogecoind you are using. However, in the current 1.5 code on Github, there is a similar message:

if (mapArgs["-rpcuser"] == "" &amp;&amp; mapArgs["-rpcpassword"] == "")
    throw runtime_error(strprintf(
        _("You must set rpcpassword=&lt;password&gt; in the configuration file:\n%s\n"
          "If the file does not exist, create it with owner-readable-only file permissions."),
            GetConfigFile().string().c_str()));


https://github.com/dogecoin/dogecoin/blob/master-1.5/src/bitcoinrpc.cpp#L1080

This indicates that your attempt at working around the problem with chmod 777 would not have had the desired effect. Instead, try chmod 600 dogecoin.conf.