I've installed FileZilla FTP server on my VPS

Setting up new groups and users - when attempting to login to one of my ftp servers through Dreamweaver I'm getting an error - cannot make connection.

Looking at the FileZilla logs it looks like the user account can't access the directory because it doesn't have permission

I assumed setting up a group/user in FileZilla automatically added that group/user to Windows server -- do I need to setup the Group/User in Windows first?

I'm used to IIS FTP so forgive my ignorance.

You can add users directly through the FileZilla interface and should not have to add them as a Windows NT user. FileZilla server simplified FTP !

What user is FileZilla server runing as? You need to make sure that whatever the service is running as has permission to that directory. I believe it defaults to System.

Also, have you tried connecting via FTP through another client or your browser?

You should also make sure that the correct permissions are set within the FileZilla server itself. Any folder that the user needs access to should be listed under directory permissions.