The settings you are using look like they should work. One thing that I notice is that the userfiles is set at the root of the site, if the root goes to your htdocs then you should make sure to update it so it is like this:
What is the exact error message that is returned, if it is more than a couple lines you can post back and attach it to your reply in a file. Also, when this occurs can you continue past the error and select a file to upload? Please post back with these details, if we can't find a problem and need to look at your files I will open a ticket for you.