I spoke with you on IRC earlier; you mentioned that the transfers were all done locally (i.e. localhost a.k.a. 127.0.0.1). By that I mean, both FTP servers are on the same computer. (Just to make sure there are no misunderstandings.)
When you refer to "Site 1" is that a remote FTP server, or an FTP server on your computer?
On your ioFTPD installation, try disabling all post/pre scripts and OnUploadComplete events - any script that would interact with an uploaded file.
In addition, if you have some free time, could you try the latest Serv-U (5.2 as of this post) instead of Bulletproof.
(If there's still a problem with corrupt files with all scripts disabled, we can conclude this isn't an ioZS issue. In which case, I will move this thread to another forum category.)
Good luck!
