Hey~
I didn't see you mention what user isolation you chose during the wizard. IIS 6.0 introduces user isolation (which you should absolutely use) to ensure that you can effectively sandbox users to their own home directory.
If you chose Local User Isolation (option 2 in the wizard), then if you do not have the directory structure setup correctly for a public user then you will get access denied everytime.
Here is a sample of how you should set this up -
FTPRoot: c:\MyFTPSite
FTPDir: c:\MyFTPSite\LocalUser
UserDir: c:\MyFTPSite\LocalUser\UserAccount
Here is the information from the IIS 6.0 Resource Guide -
Isolate Users Mode
The Isolate users mode determines a unique home directory for each user derived from the user name. The home directory of the user is treated as a root directory for the user, and the user cannot navigate or access the physical file system outside of the root directory. If users need access to dedicated shared folders, then you can establish a virtual directory.
User home directories are located in a two-level directory structure under the FTP site directory. The site directory can reside either on the local computer or on a network share. When a user accesses the FTP site, the home directory is determined in one of three ways:
For anonymous users, the home directory is LocalUser\Public under the FTP root directory.
For local users, the home directory is LocalUser\UserName under the FTP root directory.
For users that log on with Domain\UserName, the home directory is Domain\UserName under the FTP root directory.
The user home directory must be created before the user logs on. If the directory does not exist when the user attempts to connect, the connection is denied.
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We also did a webcast on this back last year. Here it is -
http://www.microsoft.com/usa/webcasts/ondemand/2095.asp
Thanks,
~Chris
Web Platform Supportability Lead
~Chris
Former Program Manager
IIS Product Unit (Microsoft)