Thank you, Leonid - that's a valid troubleshooting approach.
The IIS worker process usually has permissions to write to App_Data. That's why we've chosen it to keep the temporary files there in the first place.
You should check if the RadAsyncUpload handler is registered correctly by accessing
This request should return an empty page and no error.
Another suggestion is to disable Flash in the browser (for example by using IEs Safe Mode or by using the Tools/Add-ons/Plugins dialog in FF) and retry the upload. You should be then able to inspect the actual upload request using Fiddler or Firebug.
The Flash module doesn't provide full information about failed requests and this is something that we're looking forward to improve.
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