I had something similar with web.configs. You say that it is hosted using IIS, is web.config actually in wwwroot (or a subdirectory)?
And I think you are using Windows 7 / Server 2008?
His UAC, if so.
You can enable User Account Management or run any application as an administrator, even if you are an administrator.
Or just copy [don't move!] The files into your “my documents”, do everything with them, and then return them.
In any case, I will try updating with a copy of the files in the My Documents folder to make sure that you have all the privileges you need.
Good luck.
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