Wilfred,
You need modify the NTFS permission of that folder , to allow IIS/ASP.NET account write it.
Another solution is specify the account who can access that folder (not recommand)
<add key="CuteWebUI.AjaxUploader.WindowsUsername" value="username" />
<add key="CuteWebUI.AjaxUploader.WindowsPassword" value="password" />
Regards,
Terry