The images should be in the files/ directory by default. So your path would be:
/hsphere/local/home/philken/kennedyhardware.com/files/
I usually put sub-categories in there (cats, dets, thumbs) so it would be:
/hsphere/local/home/philken/kennedyhardware.com/files/thumbs
Make sure the .htaccess file in the files directory says "allow from all' as well. Good thread here:
http://forum.x-cart.com/showthread.php?t=8438