Ran into trouble allowing uploads to my virtual directory. In the past I've granted write but not execute access to the ISUR account. In Windows 2008 Server I found a blog post that seems to have done the trick. Thanks Brad!
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Just posting this to help the next guy that has this problem.  In IIS7 you need to make sure that the Application Pool that your website is running under is using the NETWORK SERVICE account.  Per the posts above which make perfect sense for someone coming from IIS6, setting elevated permissions for NETWORK SERVICE won't do anything at all if you're not running under that account. 

So expand the parent node in IIS, click on Application Pools, select your pool, right-click and select Advanced Settings, and then change the Identity setting to NetworkService.

Hope that saves you a few hours of Internet searching.  It's a really simple thing, but so easily to overlooked.

Brad
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Code Forth,
Martin Welch