I am having the same problem. I got it working after following this thread, but after having updated my project to my ISP's servers, the problem has returned.

I have tried it in a directory I KNOW has writeable permissions by the ASPNET process, as this has been arranged for me as an upload directory. I have tried it in a directory on its own and I have tried deploying the files using the Copy Project button as part of the project. Oh, and I have also tried FTPing the files over directly.

This editor is very good and I would like to be able to use it!

Thanks