I was working on an FTP issue the other day on IIS 7.0 and I missed something very basic which could have resolved my issue way back had I noticed the nuances of this new model. Normally people tend to go ahead with restarting IIS services for some changes done in the configuration to make sure everything is fresh. Like running IISRESET from the cmd prompt or Restarting IIS services from the IIS manager itself. But in IIS 7.0 if you want to restart FTP services ensure you don't go by the above. This will restart IISADMIN, WAS and W3SVC services but not FTPSVC. IIS 7.0 OOB Secure FTP module runs under a separate process Svchost.exe. So doing an IISRESET won't help for FTP changes to take effect.
Ensure you run these two commands instead:
Start -> Run -> cmd
At the cmd prompt:
>net stop ftpsvc The Microsoft FTP Service service is stopping. The Microsoft FTP Service service was stopped successfully.
>net start ftpsvc The Microsoft FTP Service service is starting. The Microsoft FTP Service service was started successfully.
Hope this helps one who may have unnoticed this change.