Help me Setup FTP 7.5 for an hosting environment

I am trying to setup FTP 7.5 for an hosting environment, we have a few sites running on 1 windows 2008 server.
I want to setup IIS7.5 and have 1 users for each site and that user can only access the root of there site.

I have FTP7.5 installed for 1 site and I can try to access this site, I get a username and password prompt but I can not log in not even with the admin username and password?

This is what I am doing..
1)      IN IIS 7 I’m right clicking on the site, and selecting “Add FTP Publishing”
2)      First Stage if setup
     a.      IP = All Unassigned (port 21)
     b.      Enable Virtual Host Name (ftp.****.com)
     c.      Start FTP site automatically
     d.      SSL = Allow SSL
     e.      SSL Cert = Not Selected
3)      2nt Stage
     a.      Authentication = Basic (Anonymous unchecked)
     b.      Authorization  = Specified user (username in text box) (not sure if I should use “servername\username”) I have tried both
     c.      Read and Write
4)      Finish..

I have opened up port 20 and 21 on the firewall and windows firewall.

When I try to hit the site I get prompted for a username and password but it will not let me log in, what am I missing?

by the way im using IE and Windows explore to hit the FTP site no clients..
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I believe 503 could also be caused by a file access violation. I think I ran into that awhile back. Try running a filemon on the FTP root to see whats happening when you make a connection. If your using basic authentication the user will be trying to access a directory under your root unless you create a virtual directory:

Windows domain accounts
(requires basic authentication)

Do you have user isolation setup at all? It may not be a pathing issue at all but it might be worth checking that.
I would look in the FTP log and see what error code you are getting, or if you are getting anything at all.  If nothing shows up in the log, you are not actually hitting the ftp site, and your problem exists somewhere before the FTP service.  If you get an error code, post it up here.
ctrunk514Author Commented:
Log file

2010-04-26 19:01:00 74.7.187.XXX - 21 ControlChannelOpened - - 0 0 13769dcb-aae4-4a30-8215-563511eaa99f -
2010-04-26 19:01:01 74.7.187.XXX - 21 USER protocols 530 11001 37 13769dcb-aae4-4a30-8215-563511eaa99f -
2010-04-26 19:01:01 74.7.187.XXX - 21 PASS *** 503 776 0 13769dcb-aae4-4a30-8215-563511eaa99f -
2010-04-26 19:01:01 74.7.187.XXX - 21 ControlChannelClosed - - 0 0 13769dcb-aae4-4a30-8215-563511eaa99f -
503 is a invalid command sequence.  Try reading this article, I know it says 7.0, but it should work with 7.5
ctrunk514Author Commented:
i have followed this with no luck same error, also i have turned off the windows firewall with no help.
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