we have resolved this issue.  It stems from the fact that the web api services were configured as virtual applications in IIS under the main application, which we were adding the ajax uploader.  As such, the child services were picking up the config settings of the main project, because of .NET config inheritance.

As a result, we had to add this around the system.webserver node of the config, to prevent the settings from cascading down to the child services. 

<!--this prevents this section of config settigns from cascading down to child apps -->

<location path="." inheritInChildApplications="false">

  <system.webServer>   

    <modules>     

        <add name="CuteWebUI.UploadModule" type="CuteWebUI.UploadModule,CuteWebUI.AjaxUploader" />     

    </modules>

</system.webServer>

  </location>