If the file exists, but it can't 'see' or read it, it usually is a permission issue. Check your application pool identity (IIS -> Application Pools -> click on the App Pool for your application, then Advanced Settings on the right, and look at hte "Identity" field)
If the Identity is "ApplicationPoolIdentity" then on your site, edit the permissions and add the user "IIS APPPOOL\TheApplicationPoolName" and give it full control.
If it's NetworkService, then you need to add that user to full control. See if that works!