I have multiple sites on the same IIS 7.5 server. Using the handy Bindings... feature, I am able to redirect incoming :80 HTTP queries to the appropriate server with ease.

On more than one site I have added FTP (File Transfer Protocol) to ease publishing.

I kept getting a 530 error when attempting to log users in.

I found that adding the domain name followed by a | (vertical bar) before the username solved this issue

ie:

<binding name>|<username> as the FTP user name, and it worked.

This IIS forum post may also be of use.