After weeks of uploading my one site without problems, today I tried to upload the weekly changes and got the Error while Uploading box telling me to check firewall settings, use Passive mode, or try again. I was able to upload another site to the same server after updating w/o problems. I have checked the firewall and CC VSD is in the allowed exceptions, turning the firewall off did not help either. I am in Passive mode, and a test of the connection comes up fine. Several tries after checking a few other pages for errors gets the same result. However the strange thing is my site has been updated with exception of two new .pdf files that were added. I can also upload the site with minor changes, get the same error message, but the update completes.
I run Vista Ultimate, AVG Anti Virus, dual core Intel, 4 GB RAM over a cable modem. I use VSD 7.0 registered version and updated last 9-23-11.
The site is http://www.stbonifacecincinnati.com

Tim, this might not apply to your situation, but just in case...
I was in a panic a few nights ago when I couldn't upload my changes. It's always been just fine, no problems. But this time I kept getting that same message box. I turned off all security/firewalls and checked my FTP info. Still no go. I tried it one more time and watched all the files being uploaded so I could see where it was getting hung up. Of all the stupid things, I had a = instead of a dash in an image name.

Hope you find as easy a solution as I did