OK, finally, I got it to work, but I'm not clear on why it works :(
I have a server with a number of websites, with the FTP Server 7 installed. Since all the websites share a single IP, I decided to create a single FTP site with the root set to the directory holding all the websites. Then,
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I created a new user in AD, that I want to use for FTP.
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Under the FTP site, I added the user to the FTP Authorization Rules with Read, Write permissions.
At this point, I would think I had done enough, but when I connected via FTP in VWD2008Express, with a subdirectory as the target (which itself was the root of a particular website), I could only read files, not save changes.
I went back to the FTP folder, and gave the new user "Modify" permissions under "propertiies -> security". Still couldn't save files.
I then finally, in IIS Manager, went to the website I was trying to modify (which is a subdirectory in the in the main FTP site), went to "properties -> security" there, and again added the user and gave it "modify" permissions, and now I can edit/save files via FTP.
So, my question is, what is determining access restrictions on a particular sub-directory that is itself a root of a website? Why didn't the "modify" permissions for the user account propagate to the subfolders in the FTP site?
Moving forward, I may want to give other users access only to specific websites. Can I do this the way I did it in IIS6, by creating a virtual directory in the FTP root that matches the username? Or will that "hack" no longer work in FTP7?
Or am I approaching this all the wrong way?