Many IIS 7 FTP developers may not have noticed, but all custom FTP 7 extensibility providers execute through COM+ in a DLLHOST.exe process, which runs as NETWORK SERVICE by default. That being said, NETWORK SERVICE does not always have the right permissions to access some of the areas on your system where you may be attempt to implement custom functionality. What this means is, some of the custom features that you try to implement may not work as expected.
For example, if you look at the custom FTP logging provider in following walkthrough, the provider may not have sufficient permissions to create log files in the folder that you specify:
How to Use Managed Code (C#) to Create a Simple FTP Logging Provider
There are a couple of ways that you can resolve this issue:
For what it's worth, I usually change the identity of the FTP 7 extensibility process on my servers so that I can set custom permissions for situations like this.
Here's how you do that:
Once you have done this, you can set permissions for this account whenever you need to specify permissions for situations like I described earlier.
Personally, I prefer to change the identity of the FTP 7 extensibility process instead of granting NETWORK SERVICE more permissions than it probably needs.