[Jon]

Yes I mean "above" public_html. So if your path was:
/home/httpd/domain.com/public_html/

You would store the files in:
/home/httpd/domain.com/files/

You'd have to set permissions, change the listed file locations in x-cart, and maybe a few other server configurations for access, but I couldn't say for sure without trying it on your server and making changes until it works.