Image Upload Problem using IIS on Windows Server 2008

Just installed wordpress 2.6 on Windows Server 2008 using IIS. I am unable to upload attachments to a post. In addition, I am trying to do an rss import, and I am also unable to upload files that way. The error I get is:

Unable to create directory C:\inetpub\website/wp-content/uploads. Is its parent directory writable by the server?

I have seen tons of posts on this topic, but most of them deal with either creating a .htaccess file (which I assume does not apply to windows / iis) or using chmod to set directory permissions.

To test, I have given the process identity account full control of the entire web site folder. In addition, I have tried manually creating the upload directory and applying the same permissions to it, at which point I get this error:
The uploaded file could not be moved to C:\inetpub\website/wp-content/uploads

I understand not many people on the forums are using Windows Server, but I could really use some suggestions as to the next step to take.

One question I have is about the file path. I noticed it is a local directory path, and also that the direction of the backslashes changes halfway through. Could this be part of the problem.