Hey, now. IIS isn't *that* bad.
chmod just affects the permissions of the folder/file in question. I'm assuming you're using a variant of Win2K; XP should be similar, and if you're using something earlier, I can try and find a server and let you know.
To translate, the three-digit chmod code defines the permissions. 7 is full permission (read/write/execute), 5 is read/execute, 6 is read/write, and I can't remember the rest. In order, the digits are (I believe) owner, group, and everybody else. So, 755 means that the owner can do anything, and members of the owner's group, along with everybody else, can read and execute the file but not write to it.
I can't remember if there's a way through the IIS admin console to set folder permissions. From the file system, you should be able to right-click on the folder/file and look at the properties. Under Security (or Permissions, or the like) you'll see the different settings. Open it up as you like.
Also, IIS runs as a particular user that I can't remember - begins with IUSR or I_USR or the like. Look at the users and groups defined on your system (control panel, administrative tools, users & groups) and see who's defined.
Hope that helps!