How to fine tune your WordPress settings to allow image file uploads on IIS7

We have been testing WordPress 3.2.1 and found out that it would not upload any image files.

You may end up with the following error or something similar when you try to upload an image:
Unable to create directory *********/wp-content/uploads. Is its parent directory writable by the server?

This error occurs when you have not given the IUSR account write-access to uploads directory.

You may be able to fix this problem with the following steps:
(Note: we assume that the PHP environment is properly set up, so the detailed instructions on php.ini settings are not mentioned here.)

1. Make sure a folder named uploads exists in wp-content.

This directory is oftentimes not automatically created in the IIS environment, so you may have to create it on your own.

2. Right-click on uploads directory to bring up Security tab.
Add IUSR to the user list and assign write-access to it.

3. Now, go back to the WordPress media settings and make sure if the URL for file uploads is wp-content/uploads.