So, to deconstruct the error:
404 [IOErrorEvent type="ioError" bubbles=false cancelable=false eventPhase=2 text="Error #2038"]
This is the status of the page returned, 404 after the uploaded completed.
This is the error flash returned, which says IO error. This is a super generic, Input/Ouput error thrown by flash. More or less the file wasn't there, when it was done uploading.
This is a server issue, and the problem is your server. Some security, or other server setting is blocking the flash uploader from working, period.
mod_security
suhosin
A module of selinux
Anti(malware/virus) scanners
reverse proxies
bad upload configuration
An internal server error may even be hiding the real error message.
If you disable the flash uploader, to use the ajax one instead, does it work? Yes/No
If you disable the asset manager for the legacy uploader, Does it work? Yes/No
Does the AdminCP > Maintenance > Diagnostics > Upload File test work? Yes/No
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