That error log implies the problem is the permissions settings for your file system. On Windows, check the 'Properties > Security' tab for this location (and subdirectories if they exist) to make sure they are writable:
C:\Program Files (x86)\Labkey Server\files
If the file root isn't writable by LabKey, you can't upload files there. I was able to reproduce this locally by denying write access to the "Users" group in my enlistment; your specific configuration and permission needs may vary.

I've added the original error message you saw to the troubleshooting documentation here:
https://www.labkey.org/Documentation/wiki-page.view?name=troubleshootingAdmin#perms