The little-bit-of-text that does get through suggests it might be some sort of MTU problem. The best way to move forward is to install Wireshark on the gateway and capture all the traffic involved in the FTP connection. If you see a large packet being sent multiple times, it's MTU. Otherwise, paste the trace somewhere and someone can interpret it for you, if it isn't clear to you.
Update: The original question was for Windows Server 2008, but the solution is easier for Windows Server 2008 R2 and Windows Server 2012 (and Windows 7 and 8). You can add the user through the NTFS UI by typing it in directly. The name is in the format of IIS APPPOOL\{app pool name}. For example: IIS APPPOOL\DefaultAppPool.
IIS APPPOOL\{app pool name}
Note: Per comments below, there are two things to be aware of:
- Enter the string directly into the "Select User or Group" and not in the search field.
- In a domain environment you need to set the Location to your local computer first.
Reference to Microsoft Docs article: Application Pool Identities > Securing Resources
Original response: (for Windows Server 2008) This is a great feature, but as you mentioned it's not fully implemented yet. You can add the app pool identity from the command prompt with something like icacls, then you can manage it from the GUI. For example, run something like this from the command prompt:
icacls c:\inetpub\wwwroot /grant "IIS APPPOOL\DefaultAppPool":(OI)(CI)(RX)
Then, in Windows Explorer, go to the wwwroot folder and edit the security permissions. You will see what looks like a group (the group icon) called DefaultAppPool. You can now edit the permissions.
However, you don't need to use this at all. It's a bonus that you can use if you want. You can use the old way of creating a custom user per app pool and assigning the custom user to disk. That has full UI support.
This SID injection method is nice because it allows you to use a single user but fully isolate each site from each other without having to create unique users for each app pool. Pretty impressive, and it will be even better with UI support.
Note: If you are unable to find the application pool user, check to see if the Windows service called Application Host Helper Service is running. It's the service that maps application pool users to Windows accounts.
Best Answer
I just want to say that all the answers were helpful to me.
In the end, however, the solution I came to was actually quite simple, and I should have thought of it sooner.
I realized that I had not restarted the server after I installed FTP 7. I didn't actually think this was required, but after restarting the box and seeing windows explorer and the ftp cmd working, I came to the conclusion that it must be necessary to some extent.
So, for anyone having the same issue that I've had, make sure to restart the box after you've installed FTP 7.