iTunes permissions error when downloading from Store

When I try to download music or an app from the iTunes Store I get the following error after clicking the button to download the item:

" *ITunes couldn't download your purchase*

You don't have write access to your iTunes Media folder or a folder within it. Change permissions (in the Finder) and then choose Store > Check Available Download."

I checked permissions on my iTunes Media folder and I have Read/Write access. I also applied Read/Write access to all enclosed items. I went into the iTunes Media Folder and manually created files and deleted them without any problem, so it appears I do have write access.

Unfortunately I hadn't use iTunes for a few weeks , so I'm not sure when it quit allowing downloads. Everything else appears to work fine.

Any suggestions on where to go from here would be appreciated!

OSX 10.6.5 and iTunes 10.1.1 (4)