make sure, all file types contained in the skin package are of included in the allowed file types in Host Settings.

I host my sites in a shared environment (ADPhosting - it's $4/mo with automated DNN setup with 200MB MS SQL dbase), which most likely also has the IIS executionTimeout set to a low value, and I've found that you need to add code snippet that ups the executiionTimeout value as well, otherwise IIS times out.

Here's what I put in my web.config file in place of the default DNN version:

   <httpRuntime useFullyQualifiedRedirectUrl="true" maxRequestLength="2000000" requestLengthDiskThreshold="2000000" executionTimeout="2000000" />

With this code in place my Users can upload files in excess of 70MB through the web server.

NOTE: I don't like using the HTTP server to upload files this large, but for my end-Users, who don't have a clue about how to FTP, this is a blessing.