I've seen this same problem. I have no idea what the cause is, but deleting files in /user fixed it for me as well even though the userfiles looked perfectly fine to my eye.
Particularly annoying is the fact that no errors are printed to any logfile in /log like oh say the SystemError.log file! If you don't know about the c:\ file you'll be terribly confused and it just seems that ioftpd won't start...
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