I am not sure what is the problem in your case, but I have a couple of suggestions:
1) try modifying your View/Upload paths and see if it makes a difference. You can try adding a slash at the end of the path ( "/app_files/")
or you can try changing the UploadPaths to a simple "/".
2) If you are using version 2009.1.527 or later, you can override the CheckWritePermissions() method from the base content provider class and implement your own logic for checking if a folder should have Upload permissions. The "Cannot write to the Target Folder!"
error is raised because this method returned false at some point during the save operation.
If both of these fail, you can open a formal support ticket and send us a sample project, so we can investigate further.
the Telerik team