Hey Joe,

Here's the answer from Rackspace:

Thanks for the update. Microsoft has a bug in the older versions of Asp.Net in which creating a file or folder in a sub directory cannot be done because it checks the permission of all the parent directories ahead of it. In our environment, the primary account has different permissions than the sub account, so the check fails. There are actually 2 workarounds for the permission check bug.

One work around is to set a symlink on the servers so that your path went
from: \\fsvs01\Target01\322874\350866\www.lakeshoregardens.org
to:C:\wwwroot\350866\www.lakeshoregardens.org\web\content

This way the way the code checks the directory, only goes as far as the sub account where it has permissions. This may be why your code can work now.

The other work around is in Microsoft's latest release of Asp.Net 4.0. We are actually taking Beta applications for Asp.Net 4.0 as stated in our forum post here: https://manage.rackspacecloud.com/forum/posts/list/3961.page

If you would like to join the beta, feel free to let us know. There are a some breaking changes in Asp.net 4.0, so be sure to review those before getting any of your sites converted to the Beta.