NeatUpload will not work by default when used with Windows 2008 Server. Like many other web applications that you install from earlier Windows servers, you need to make modifications to the web.config file.
First of all, you need to make sure that the component is installed properly. This procedure is described in its documentation. Then you need to make the following change (in bold) in web.config:
<remove name="ScriptModule" />
<add name="ScriptModule" type="System.Web.Handlers.ScriptModule, System.Web.Extensions, Version=188.8.131.52, Culture=neutral, PublicKeyToken=31BF3856AD364E35"/>
<add name="UploadHttpModule" type="Brettle.Web.NeatUpload.UploadHttpModule, Brettle.Web.NeatUpload" />
The component should function normally now. You can read the post on the Brettle web site where this question was answered by Dean Brettle.