Image upload error "-“x.jpg” failed due to an error…"

New WP install 3.2 1, two templates from WP site used so far, but just started

*MAIN ISSUE*

– When trying to upload image using ADD NEW button, using the Flash uploader I get this error
—-“06flier.jpg” has failed to upload due to an error
—-The uploaded file could not be moved to
—-D:\Hosting\6XXXXXX\html\wordpress/wp-content/uploads.

– When trying to upload image with browser uploader I get this error
—-Error saving media attachment.

*What worked*
– Was able to post an image using the Press This tool

*What doesn’t work*
– Media Library only shows image from Press This upload, no manually uploaded images

*Site Info*
– Brand new install
– Host- Godaddy (not my choice)
– Folder for uploading files wp-content/uploads (no / in front)
– Installed WP from Godaddy installer
– Two free templates from WP site used so far, current is zeePersonal 1.0.2

*Troubleshooting*
– Manually loaded images to upload folder via FileZilla, still nothing in Media Library when I try to find an image from the site
– Changed permissions to 777 (even though I see this is a bad thing)
– Ran WP re-install from Dashboard “Reinstall now”, no change
– Extensive reading of forums, this is a common error but I still can’t figure out why my site is not working
– In Upload files> Full URL Path put “http://sitename.com/wordpress/wp-content/uploads”