Hi.  I'm also having the same problem.  I can't overwrite an existing file in the \portals\0\ folder, even though the file is NOT read-only.  I have the problem when I'm logged in as a Host account, too.  I can upload a file as long as another file with the same name does NOT already exist in that folder.

Here's my environment:
      OS       Windows 2000 Server SP4, Fully Patched
      DNN     3.3.5

I even ran the FileMon utility (www.sysinternals.com) on the server while I attempted to upload/overwrite an existing file, and it didn't report any file permission-related errors.

I can overwrite the file using "Windows Explorer" and browsing to the server from my laptop.

It doesn't appear to be an NTFS permission-related error. 

Thanks,
Van

Believe I've found a work-around at least for City of Wilmington's environment -

1.       Problem occurs due to the file name already being contained in the Files table.

2.       The source of the problem seems to be in stored procedure AddFile.

     SELECT SCOPE_IDENTITY() is returning NULL because it’s outside the IF .. ELSE block. When the file name exists in the Files table the UPDATE block of the IF statement runs but NULL is still returned. Fix seems to be to move the SELECT SCOPE_IDENTITY() statement up into the INSERT block of the IF statement so that a valid identity is returned when inserting new files and nothing is returned when updating an existing file name.

Can you please show how to change it. Here i show the original stored procedure.
Dont know where to put the select SCOPE_IDENTITY()

CREATE procedure mydomain.AddFile

@PortalId    int,
@FileName    nvarchar(100),
@Extension   nvarchar(100),
@Size        int,
@WIdth       int,
@Height      int,
@ContentType nvarchar(200),
@Folder      nvarchar(200),
@FolderID    int

as

insert into Files (
  PortalId,
  FileName,
  Extension,
  Size,
  WIdth,
  Height,
  ContentType,
  Folder,
  FolderID
)
values (
  @PortalId,
  @FileName,
  @Extension,
  @Size,
  @WIdth,
  @Height,
  @ContentType,
  @Folder,
  @FolderID
)

select SCOPE_IDENTITY()