kerberosx

Made a little post on my blog about it: WordPress automatic plugin upgrade on IIS 7 fails

I faced this problem too. First I was troubleshooting possible NTFS permission problems. But even when giving full control permission to Everyone on the root of the drive I still had this problem.

So I started thinking exploring other possible causes. In our setup it was because for some reason WordPress didn’t properly detect the (absolute) path to the plugin directory.

So I used the option in wp-config.php to manually set the path. You can do so with following parameter:
define( 'WP_PLUGIN_DIR', $_SERVER['DOCUMENT_ROOT'] . 'c:\path\to\your\wp-config\folder' );