unable to upload image ???

I get this error when trying to upload an image to my new install. I have changed the permissions to 777 as suggested in another post.

The uploaded file could not be moved to D:\Inetpub\mydomainnamehere\wp/wp-content/uploads/2009/01.

on my ftp i have the directory created so it exsists and I even made a local folder structure using the above path.

Anyone on ideas? TKS!!!!!!!