Error "530 Valid Hostname is expected" using FTP to IIS7

Issue

When connecting to IIS7 using FTP you get the following error.

530 Valid Hostname is expected

Reason

When you set up name-based FTP services IIS7 wants the sitename defined with the username so that IIS7 can associate the username with the site they wish to log in to.

Solution A

If you want more than one FTP site on your VPS you will need to :

Configure all FTP clients such that :
Host: Mysite.com
User: Mysite.com|Username

Note the "|" that seperates the Sitename and the Username.

Solution B

If you only have one FTP site remove the "Host Name" defined in the "Bindings" property of the FTP site.