Michael, many thanks for your help with this. After some messing around, I'm still stuck with one error message:
Access to the path 'd:\hosting\gophervillage\web.config' is denied.
When I manually create the "Config" directory, the backups get created OK, so that part is working. If I remove web.config completely, the message changes to "can't find", so it appears to find it OK, but is unable to write to it.
I also noticed some other odd behavior: If I leave a copy of SiteUrls.config inside the Config directory, I get the additional message Access to the path 'd:\hosting\gophervillage\web.config' is denied. If I REMOVE this file from Config, but leave a copy in the root, the message goes away. Very strange.
Is it possible that one of the other directories needs write privileges. Right now, I have manually set up bin, portals, desktopmodules and config.
I am doing a fresh install here with 4.0.2, I have wiped everything clean and recreated several times now.
Thanks, Chris