An update. In the Admin -> Main Options, I switched from TelerikUpload to AspnetUpload and the problem went away.
For reference, I verified that the web.config contains httpmodules contains:
and the httphandler contains:
FYI, there is other Telerik components in this DNN site (the only site on this DNN) and I have good control over the server so I ca do about anything to help debug. It's IIS 6, SQL 2005, DNN 4.9.0 .NET Framework: 2.0.50727.1433
Jon