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How to install Microsoft FTP Server (IIS) with multiple user accounts, each having their own separate home directories. Should work under any recent windows version.

Prerequisites / Install components

• Create some local user accounts that will later be used to access the server w/ FTP
• With the Server Manager Tool install the Role "Webserver (IIS)", including Managment Tools
• One the details page, select FTP Server, FTP Service and FTP Extensibility

Setup the basic FTP Site

• Open IIS Management Console
• Create a new FTP Site named "MainFTP" pointing to "C:\inetpub\ftproot"
• Next, leave IP unassigned and disable SSL (this being a simple manual for using FTP internally)
• Select Basic Authentication and Allow access to Specified users
• For the username you can take your local user w/ read/write permissions for example to be able to proceed
• Finish the wizard

Adjust IIS FTP Settings

• Under the newly created "MainFTP" Site select user isolation
• Choose "Isolate Users" - "User name directory"
• Under "MainFTP", create a new virtual directory named "LocalUser" pointing to "C:\inetpub\ftproot" (must be named "LocalUser" to work correctly)

Per-User Steps

• Under LocalUser, create a new virtual directory matching the username
• Point the physical path to where you want
• Double click the "FTP Authorization Rules" in the newly created virtual directory
• Click "Add Allow Rule"
• At specific users, insert the corresponding username and set permissions as wanted
• Make sure the user also has the right NTFS permissions in the file system for this directories

Sources

http://www.sherweb.com/blog/how-to-set-up-ftp-access-for-multiple-users-with-user-isolation/