If you are getting upload error as stated in above image from Wordpress upload and your IIS running on Windows Server then you will have to assign IIS_IUSRS modify/write permissions on the parent folder or upload folder only.
How to assign IUSER permission?
Go to C:\inetpub\wwwroot\wordpress > Right Click then Properties
From the Security tab under Group or usernames box select IIS_IUSRS then click Edit
Following windows will appear. Again select IIS_IUSRS and then tick the Modify box. Click Apply then OK
As you can see Modify/Write permission has been granted. Click OK
Now you can upload anything from Wordpress
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