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I have a windows 2003 standard unit and i am trying to setup a windows 2008 standard server but while setting up FTP when i try to log on, i get a message saying "534 Policy requires SSL ... for control channel'. I have checked about it and have gone through some other forums where people have mentioned similar issue but i haven't come across any effective solution yet.
It might be the firewall protection that is activated in your computer and for that reason you are getting that problem. If you want to check that then just disable that and see if that gives you that error again or not. If the problem was due to the firewall protection then this time you will not get that issue. I am not very sure about it but you can try it once to see its possibility. I hope it will help you resolve the problem.
Have you tried to clear the allow only anonymous connections security checkbox? To do that start the Internet Service Manager that loads the Internet Information Server snap-in for the Microsoft Management Console. After that right click the default FTP site folder and then click on Properties. Go to the Security Accounts tab and then clear the Allow only anonymous connections security check box and then click ok.
Can you try to give the username the "Access this computer from the network permission" but select the Access this computer from the network advanced user right. Or else you can even try to use the command line FTP utility and specify the FTP usernam in DOMAIN\Username format when you log into the FTP Site. If it works then ask all users to log on by using DOMAIN\Username format.