Note to self: do not use a virtual directory for the AssetManagement DMS folder when configuring Ektron web sites.
I learned this the hard way (again) today while trying to figure out why my DMS assets were not uploading properly. After a couple of hours (and a night of sleep) and setting up a completely new instance of a bare bones Ektron CMS that functioned properly, it finally dawned on me that perhaps one of the various virtual directories were causing the issues. Apparently, the AssetManagement folder cannot be virtual or it throws off their file upload processor (at least for v7.01).
I believe they have fixed this with the latest version (I hope.)
Let this be yet another learning lesson and hopefully assistance to anyone else running into this similar issue.