looking closely at the error message, it is trying to move the uploaded fiile to:
E:\webs\lsmontgomery.com\wwwroot\..\..\downloads\
This location translates to:
E:\webs\downloads which does not have the propper permision.
Most likely you have the uploads folder set as "../../downloads/" try setting it as "downloads/ so that the uploaded file will go to:
E:\webs\lsmontgomery.com\wwwroot\downloads\
The dubuging code should be:
<?php
error_reporting(E_ALL);
ini_set('display_errors','on');
?>
Not including the single quotes around on was causing the errors you where getting.