Hi rxraza,
You did not set up the upload module correct in web.config. Please refer to http://www.ajaxuploader.com/Deployment.htm step 2. It has two sections. one for classic application pool, one for integrated application pool. The visual studio will use the classic application pool by default, I think you production site using the integrated mode, you can try the second section.
2. Add Uploader httpModule to web.config's httpModules list
To allow Ajax Uploader to handle upload requests, you need to add its HttpModule to your application.
IIS Classic mode
<configuration>
<system.web>
<httpModules>
<add name="CuteWebUI.UploadModule" type="CuteWebUI.UploadModule,CuteWebUI.AjaxUploader"/>
</httpModules>
</system.web>
</configuration>
IIS Integrated mode
<configuration>
<system.webServer>
<modules>
<add name="CuteWebUI.UploadModule" type="CuteWebUI.UploadModule,CuteWebUI.AjaxUploader"/>
</modules>
</system.webServer>
</configuration>
Regards,
Ken