I found that the problem on 1&1 hosted service is that you must use real server file paths.
1.) The \temp directory needs to be off the route directory of your web site.
2.) CuteEditor uses the web.config file in the route directory.
3.) After you haver created the \temp directory and assigned full premissions to network service and users, run this piece of code to get actual path:
Partial Class _Default
Protected Sub Page_Init(ByVal sender As Object, ByVal e As System.EventArgs) Handles Me.Init
Dim FILENAME As String = Server.MapPath("\temp")
Me.TextBox1.Text = FILENAME
4.) Use the path returned from the above code as follows in web.config:
<add key="CuteEditorTempPath" value="E:\kunden\homepages\30\d999999999\temp" />