The php settings to adjust are explained here How do I upload files bigger than 2MB / How can I increase the upload file size limit?
Xibo saves uploaded library content to the library location specified in CMS settings, you really should be able to upload and download files to / from the CMS library without issues, adding files manually to the library location might not work well, as I don’t think database records would update correctly.
What CMS version are you using please?