Like many others (as evidenced by the various posts and searches on this topic), I do this infrequently enough that it has come up and bit me in the a** too many times so hopefully by memorializing my idiocy in blog post form, I will NOT forget this lesson I learned when managing FTP users in IIS7.
If you an experienced IIS manager (6.x and better) you are most likely to get caught by this. You’ve probably done all the normal steps (added users to Windows, added to correct group, given write access to the correct folder) and yet nothing seems to work for you on this new users… Well, if when you’ve logged in using the corect username and password and still get the dreaded “530 User cannot log in, home directory inaccessible” message, then this should resolve your problem.
If you go to the virtual directory you are looking to allow access to in IIS, make sure that you go into the “FTP Authorization” and create a rule for this user.