folder permission for uploading files

As for your file uploading issue, what's the upload directory's position? Is it under your application's root directory or in another place on the machine? Also, would you add some particular access permission control on it or simply allow your ASP.NET application to have full control over it?

Generally, for your scenario, you can check the following two things first:
1. Whether your save file code has refer to the correct directory path.
In ASP.NET application, if you want to reference a sub directory under your application root directory, you can use the "~/subdir" style path and user Server.MapPath to map it to physical path. e.g.

protected void Page_Load(object sender, EventArgs e)
{
string path = Server.MapPath("~/uploadfiles/");
Request.Files[0].SaveAs(path +
Path.GetFileName(Request.Files[0].FileName));
}

2. If the path is correct, you can check your ASP.NET worker process's security identity to see whether it has the sufficient permission to access the target directory. The ASP.NET process identity mode is different between IIS5 and IIS6(IIS5 use MACHINE\ASPNET account while IIS6 use NT AUTHORITY\NETWORK SERVICE by default), you can refer to the following reference:
#Configuring ASP.NET Process Identity
http://msdn2.microsoft.com/en-us/library/dwc1xthy.aspx[^]
After you get your ASP.NET application's executing account(security
identity), you can check its access permission to the directory you want to save file.

Refer:
http://bytes.com/topic/asp-net/answers/578390-file-uploading-permission[^]
http://www.daniweb.com/forums/thread43223.html[^]
http://forums.asp.net/p/984207/1264873.aspx[^]