The server front end is Windows 2008 running IIS7 is medium trust
Content will be stored via a UNC content share (Yes, I’ve run caspol –m –ag)
The database is SQL2005 (although we are not even getting to set this up yet)
The application pool’s identity is <domainname>\apppool_954700160
This account has write access to the file system

However, when I try using the install wizard I get the error.
However…if I manually set the connection string in the database… the application installs without problem (and I can upload to the site).
Interestingly phpbb’s test finds that everything is writable (it was the only application I could think of that had a resource check).