moakr - good job, thank you!!!
Changing 513 to 544 in the c:\edtftpd\etc\passwd file for my test ftp user fixed the problem for me too! I was able to login, put and delete file.
My environment (for EDT techies):
Windows 2000 Pro, SP4, .NET 1.1, regular workstation - not a server, NOT a DOMAIN controller. I created a regular LOCAL user through control panel, then enabled it using the edtFTPD manager. Could not login to ftp server - "530 Login incorrect". Tried to add the recommended "flags" and "native" entries under "/edtFTPD" and "/" keys to about 3 registry keys that I found named "mounts v2" - that did nothing. I followed the instructions from moakr's post and it worked.