CMS with SP1 applied - 10.1.1.268

When uploading a file/image from local computer into asset manager
using Telerik, I get the following error:

ERROR: Can't write file!

The asset manager folder on the file system has sufficient access
rights. I'm able to upload with old editor and from within Asset
Manager interface.

I can overwrite old files, but unable to upload new files using
Telerik.

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