I updated my blog last week and since that time my media uploads have failed.
I have played with the path, and permissions. At this point everyone in the world could write to my upload directory, but wordpress fails.
This error makes me think it is a path issue:
C:\inetpub\wwwroot\www.cabovillas.com\blog/wp-content/uploads/2012/01
The slashes change after blog. If I manually put the path in the media path section and change the slash I still get an error.
I deleted the uploads folder and created a new one with permissions for everyone to have full control.
I get the same error even though the month and date folder are created correctly by WP.
What the heck is going on?