To help troubleshoot this thing --
since it appears from previous suggestions, that this could either be:
1. a permission problem on the temp folder. BUT NOT IN THIS CASE - the fact I can see the temporary file created and deleted in the correct temp folder path pretty much proves that the temp folder is set up correctly and is writable by asp.net
2. a problem with the registration of the CuteEditor Upload httpHandler in web.config.
To prove/disprove #2 it would be nice if you could provide me with a url/request I can set up to test just that this handler is working correctly. e.g. If I can go to a url such as: "http://localhost/MyProject/CuteEditor_Upload.ashx?some_parameters=some_values" and know that the handler should respond to this request with a predictable response (other than a server error) that will make it obvious if the handler is registered correctly or not.
Since I know nothing about the (undocumented) communication between your control and the upload handler (and have no intentions of reverse engineering it :) ) I'll just have to wait for futher instructions