After many emails and about 2 hours on the phone with 1and1 I have determined that 1and1 can no longer support DNN on any of thier shared hosting plans and the interesting this is they have no idea why, but they just "can't".
I have to pause here for a second and note how difficult 1and1's tech support is.
They have a very strong firewall between the "tech support" that answer the phones and the people that actually know what is going on. First 1and1 claimed that I must have done somthing to cause the problem then to prove them wrong I competely removed my site and started with a fresh install of DNN (4.8.0) which I had done several times successfull in the past and got the same FileIO error. After serveral emails (with me providing them lots of technical data, log information and specific questions) I contiued to get one line responses which no joke were just like this (these are the actual full responses I recieved back):
"we have not changed anything on our servers, have a nice day"
"its a scripting problem, contact DotNetNuke"
"I clicked on your site and did not see any errors please contact us if the problem persists"
I finally called and talked to somebody and after 2 tech support people half hour of hold time and being transfered to somebody completely new I demanded I talk to a supervisor. His didn't believe I had ever gotten DNN to run. They claim it does not work since the upgraded to ASP.net 2.0 a year ago (dispite the fact I had a perfectly running DNN website for the previous 4 months until it just stopped).
[un pause] (I feel better now after that I got that off my chest)
Needless to say I did a swap over to 3Essentials hosting that night and had my website back up and running the next day (and thier tech support rocks! Thanks Mitch Sellers for the recomendation)
If you are on 1and1 shared plan and you are getting the above error (listed in the first posting of this thread) you will have to change hosting providers or upgrade to a much more expensive 1and1 plan.