Warning [PHP]: fetch(c:/Program Files/Ensim/Site Data/fbclanett/Inetpub/wwwroot/templates_c\db%3Asystem_block_login.html) [function.fetch]: failed to create stream: Permission denied in file c:\Program Files\Ensim\Site Data\fbclanett\Inetpub\wwwroot\class\smarty\Smarty.class.php line 1164
Warning [PHP]: fetch() [function.fetch]: Failed opening 'c:/Program Files/Ensim/Site Data/fbclanett/Inetpub/wwwroot/templates_c\db%3Asystem_block_login.html' for inclusion (include_path='.;c:\php4\pear') in file c:\Program Files\Ensim\Site Data\fbclanett\Inetpub\wwwroot\class\smarty\Smarty.class.php line 1164
Warning [PHP]: fetch(c:/Program Files/Ensim/Site Data/fbclanett/Inetpub/wwwroot/templates_c\db%3Asystem_block_mainmenu.html) [function.fetch]: failed to create stream: Permission denied in file c:\Program Files\Ensim\Site Data\fbclanett\Inetpub\wwwroot\class\smarty\Smarty.class.php line 1164
Warning [PHP]: fetch() [function.fetch]: Failed opening 'c:/Program Files/Ensim/Site Data/fbclanett/Inetpub/wwwroot/templates_c\db%3Asystem_block_mainmenu.html' for inclusion (include_path='.;c:\php4\pear') in file c:\Program Files\Ensim\Site Data\fbclanett\Inetpub\wwwroot\class\smarty\Smarty.class.php line 1164
Warning [PHP]: fetch(c:/Program Files/Ensim/Site Data/fbclanett/Inetpub/wwwroot/templates_c\default%2Ftheme.html) [function.fetch]: failed to create stream: Permission denied in file c:\Program Files\Ensim\Site Data\fbclanett\Inetpub\wwwroot\class\smarty\Smarty.class.php line 1158
Warning [PHP]: fetch() [function.fetch]: Failed opening 'c:/Program Files/Ensim/Site Data/fbclanett/Inetpub/wwwroot/templates_c\default%2Ftheme.html' for inclusion (include_path='.;c:\php4\pear') in file c:\Program Files\Ensim\Site Data\fbclanett\Inetpub\wwwroot\class\smarty\Smarty.class.php line 1158

is your templates_c directory writable by the server?

Yes. It places those blank files in the directory. From looking at the errors I can't figure out why some of the slashes are different in the directory string.

..../wwwroot/templates_c\db%3Asystem_block_login.html

why is it placing the \ in with the / such as a normal windows directory structure?

I don't know if this has any relevance, but you have a space in "site data"? It is possible that this messes up something, although I don't know for sure.