IIS7 Windows Server 2008 FTP -> Response: 530 User cannot log in

I just launched my first IIS FTP site following many of the tutorials from IIS.NET... I'm using IIS Users and Permissions rather than anonymous and/or basic.

This is what I'm seeing while trying to establish the connection...

Status:    Resolving address of ftp.mydomain.com 
Status:    Connecting to ###.###.##.###:21... 
Status:    Connection established, waiting for welcome message... 
Response:  220 Microsoft FTP Service  
Command:   USER MyFTPUser  
Response:  331 Password required for MyFTPUser. 
Command:   PASS ********************  
Response:  530 User cannot log in. 
Error:     Critical error 
Error:     Could not connect to server

It's quite old but I found myself in the same situation. I solved giving the right permission to the "Network services" on some configurafiles:

CACLS “%SystemDrive%\Windows\System32\inetsrv\config” /G “Network Service”:R /E
CACLS “%SystemDrive%\Windows\System32\inetsrv\config\administration.config” /G “Network Service”:R /E
CACLS “%SystemDrive%\Windows\System32\inetsrv\config\redirection.config” /G “Network Service”:R /E

Hope it helps.

On Windows Server 2008 you must now use these commands:

ICACLS "%SystemDrive%\Windows\System32\inetsrv\config" /Grant "Network Service":R /T

ICACLS "%SystemDrive%\Windows\System32\inetsrv\config\administration.config" /Grant "Network Service":R

ICACLS "%SystemDrive%\Windows\System32\inetsrv\config\redirection.config" /Grant "Network Service":R

in my situation, I was missing Role Service FTP extensibility, which is actually allows IIS Manager Auth. This is pretty tricky, as you could allow IIS Manager auth, but still it would not work until you have not installed FTP Extensibility

This worked for me on Windows Server 2012

ICACLS "C:\Windows\System32\inetsrv\config" /Grant *S-1-5-20:R /T
ICACLS "C:\Windows\System32\inetsrv\config\administration.config" /Grant *S-1-5-20:R
ICACLS "C:\Windows\System32\inetsrv\config\redirection.config" /Grant *S-1-5-20:R