Thank you Sebastian.

"The Windows user account under which the application is running. This is the account which needs to be granted folder permissions on the server.
    NT AUTHORITY\NETWORK SERVICE"


I'm using Windows Server 2003.  The "NETWORK Service" has Full Control and it will not work.  I've exhausted myself and tried 100 things over 2 days on the live server and I cannot remove this fault. 
Another person in the office has 5.6.1 working on the dev server so I thought to try that.   It worked first time with no fuss at all.  DNN 5.6.1 works.  (At least this part)

I'll keep 5.6.2 running in case it can be any help to you somehow.

Yes, I have also tried with full permissions to all those accounts, changed to local system, network service, etc. and cannot get rid of the problem. The funny thing is that gives you no error on many other pages. For example: Admin > pages > home (edit) > advanced settings > apparence (no problem)
Host > portals (edit any of them) > apparence: You do not have permissions to view any files on the file system
Regards,
Fred

I have having the same issue.