Generally, that is correct. If a user is in the /etc/ftpusers file, they cannot ftp to the system - regardless of their interactive status (restricted, full access, etc). If you want to keep someone from ftp'ing cokmpletely, put them in this file.
The error you are encountering has to do with the permissions on the directory and/or file at the destination end. As already stated, you can try putting the file in /tmp or have the admin/owner fix the file permissions.