This follows an earlier post on the “Cannot complete this action” errors I receive when using the Microsoft.Sharepoint libraries on my development server. The error does not occur on my company's staging server. Weird.
I completely removed Sharepoint Services from my development server and changed the account to a bonafide domain admin group account. I made sure Network Service and IIS_WPG had the appropriate permissions, duplicated my IE settings with those on the working server.
Still friggen' nothin' to report. Sorry. Chances are, however, that since this seems such a generic error that my fix wouldn't necessarily help you anyway. Here's the first of 10+ pages of results from googling the sharepoint groups as evidence.
My first impressions of Sharepoint Services is 87% positive, but if I were writing a review I would definitely include the word “squirrelly.”