Line 14 of srv.arc in arc3.1 switches the user id that Arc (mzscheme) is running under.
The purpose of this is to allow port 80 to be opened by mzscheme, and then to switch to a non-privileged user to run the server under.
If you don't need to open port 80, or you're going to run the Arc server as root, simply remove that line.
Alternatively, choose a user id to run the Arc server under, make the Arc directory and all its files owned by that user, and change the "2" in the setuid command to the numeric user id of that user.