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After recently setting up a Moodle install (hosted on IIS on Server 2008 R2) with SSO (LDAP server based (good old Microsoft AD) with NTLM looking after things) we found that any new users were getting this error message appearing.

Fatal error: $CFG->dataroot is not writable, admin has to fix directory permissions! Exiting.

The simple solution is to this problem is to change the NTFS permissions on the moodledata folder to allow write/modify to any user who is using moodle (I just set ours to domain users).