Please, make sure you have followed all suggestions from this help article.
There is a special section on Settings for IIS7, if that's your case.
Other than that, the problem is probably on the server. Have you tried substituting RadUpload with regular ASP.NET FileUpload? Does the issue persist? Apart from this how do you process the files on the server? Can you please attach your code here so that we can take a look. Thank you.
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