Hi,

in my case this was absolutely nothing to do with the folder permissions - folder permissions has been a long standing problem with DNN in as much as it usually has to be manually set on installation and can cause you a lot of problems if you are unfamiliar with it! 

The problem I had was resolved by increasing the .Net framework trust restrictions from full trust to medium trust because the server had been secured/hardened for hosting use  - luckily I had access to change that trust level but if you are using anything less than dedicated hosting it is unlikely you will be able to change what the host company has set as .Net trsut level. As mentioned before - this is something that Microsoft recommends anyway, and certainly something that most hosts will do thereby preventing DNN from installing correctly.

With regard to modules not operating correctly due to .Net trust, I have never experienced this, I guess if a problem with ASP.Net trust exists you wouldn't even get as far as the dotnetnuke installation working, in consideration of this I would suggest issues with modules would be more to do with folder permissions (Network Service permissions) as opposed to .Net trust levels.

Hope this helps someone out there!

Adrian