Interestingly enough after hours of playin around with this thing I found that the permisions errors that result in

DotNetNuke Configuration Error
Could not find a part of the path 'C:\Inetpub\****\Config\Backup_2006721218\web_.config'.Access to the path 'C:\Inetpub\*****\web.config' is denied.

DotNetNuke has extensive file upload capabilities for content, modules, and skins. These features require custom security settings so that the application is able to create and remove files in your website.

Using Windows Explorer, browse to the root folder of the website ( C:\DotNetNuke by default ). Right-click the folder and select Sharing and Security from the popup menu ( please note that if you are using Windows XP you may need to Enable Simple File Sharing before these options are displayed ). Select the Security tab. Add the appropriate User Account and set the Permissions.

If using Windows 2000 - IIS5
- the {Server}\ASPNET User Account must have Read, Write, and Change Control of the virtual root of your website

If using Windows 2003 - IIS6
- the NT AUTHORITY\NETWORK SERVICE User Account must have Read, Write, and Change Control of the virtual root of your website

are easily overcome by applying full control to the everyone account on the root folder on an XP Pro box... granted this is not a finite solution for deployment, for developement I believe this may be the quickest way around these persmission problems as i tried a little bit of everything else I could thin of and came up with nothing that worked other than this...

I would be interested in hearing from someone who has found another set of accounts that work correctly to alleviate this error message as the NETWORKSERVICES account and ASPNET account did not do the trick here.