I'm getting (as I'm sure some of you have!) the dreaded HTTP error message when uploading files to Media. It seems to be when users have wordpress on a server, as I have.
I found an article which has solved the problem for a lot of users and involves copying/pasting some code, but I'm sure where I paste the code to. If you can help, I'd be grateful.
Server Access Control based on Authentication
If you're using Access Control based on Authentication on your Webserver (often known as htpasswd, Basic Authentiaction, password protected directory or similar), WordPress is not able to handle it for Flash Uploader, Cron and XMLRPC. Related files need to be excluded to work. Keep in mind that this might break your security considerations.
# Exclude the file upload and WP CRON scripts from authentication
Allow from all
Deny from none