Following Bruce's suggestion to make use of the Install Available Extensions feature is worth a try as it removes the possibility that the time-out may be caused by a slow upload. To follow his suggestion I would:
1. Download a fresh copy of the Gallery 04.04.00 Install package from the Gallery's CodePlex project site:
http://dnngallery.codeplex.com/releas...
2. Unblock the downloaded zip package as Sebastian explained.
3. Rename the unblocked zip package from:
Dotnetnuke.Modules.Gallery_04.04.00_Beta_Install.zip
to
Dotnetnuke.Modules.Gallery_04.04.00_Beta_Install.resources
4. Upload (via FTP or your GoDaddy file manager) the renamed package to the site's Install\Module folder
5. When logged in as host user, navigate to Host --> Extensions and from the action menu select "Install Available Extensions". You should see the Dotnetnuke.Modules.Gallery_04.04.00_Beta_Install package as one of the available extensions that may be installed. Check the checkbox next to the Gallery package and click Install Selected Extensions.
Note: The error that you originally posted refers to a failure during that portion of the installation when a large number of files are extracted from a zip archive (named Resources.zip) that is internal to the Gallery install package. It is not possible (easily at least) to manually install these files separate from the overall module installation.
Also the value of 8192 that you found specified in the <httpRuntime> element of the site's web.config file would be the default for the maxRequestLength and requestLengthDiskThreshold attributes and refer to the maximum size in KB of a file that is being uploaded. That value should be sufficient for the Gallery module. The executionTimeout attribute is the one I asked you to check. I'm assuming that you did not find it specified in the <httpRuntime> element so it would have a default value of 110 seconds. I would suggest adding the attribute and value:
executionTimeOut="300"
to the <httpRuntime> element (note that these attributes are case-sensitive so use a lower-case "e" and upper-case "T" and "O") and re-trying the installation of the Gallery module. That timeout value would allow 5 minutes and should be more than sufficient if this really is a timeout issue.