Christine, thanks for posting that extra info.
This site is on a Windows server. I know this because of the file structure (D:\...) and because it's using a web.config file which is somewhat analogous to an .htaccess file on a Linux account. PHP doesn't run as well on Windows, and I strongly urge you to switch to Linux. I realize this isn't a perfect explanation of why you're having the trouble, but it's almost certainly the right solution.
Of course, if there are other services running on the server that require Windows (like some application that uses ASP or .NET), you will not want to do this. In that scenario, I would recommend that the client get a second hosting account (a Linux one), and migrate the WordPress site to it. I'd recommend moving any PHP application actually, not just WordPress.
Assuming this is not an issue and changing to Linux wouldn't present a problem, it will be fairly easy to make the switch... it's just a few clicks and the patience of waiting through the migration which usually takes about a day. There's an article to walk you (or your client) through the process at http://x.co/switchos
Please talk it over with your client and make the switch if you can. Then let us know how it goes :)