User Can't Upload Files

Thanks in advance for any help here ...

I'm working on a fresh WPMU install and just added the latest 100 theme pack. One user cannot upload any custom header images, or add files to their media library. They receive the following error:

"The uploaded file could not be moved to the upload folder."

Other users can customize headers and add images with no problems.

When this user's blog was created, we did an import of their old WP blog uploaded all their files and fixed the image links. At the time, they were not a supporter and the space limit was 25MB, way below their 187MB. Since then, however, I have installed the Support plugin and extended Supporter status to this user with 1GB of space. But they still cannot upload.

Any thoughts?