It appears Internet Explorer 9 has issues with file uploads. Putting IE9 into compatibility mode temporarily will allow you to upload the file, but it may break other features so I don’t advise staying in it. A Google search doesn’t reveal too much, but the issue found here http://drupal.org/node/1099952 sounds similar to the problems we’ve faced.
The only upload/download problem I have had with IE9 was that it would not want to download files. The built in download manager would die. Looking through the forums I saw a few posts from MS where they found that sometimes something got screwed up when you did an update from IE8 to IE9. I solved it by going removing IE9 (Control Panel->Programs and Features->Turn Windows features on/off. I then rebooted and reinstalled it through Windows features and all is now well.