So it seems it was a quota issue, but not a quota on the hard drive.
On the server you have to go:
Start->
Programs->
Administrative Tools->
File Server Resource Manager
Open the Quota Management tab on the left side. Select Quotas
The website I was having trouble with appeared in the list. It had a quota of 100MB set
Increasing the quota worked!
Decreasing the quota back to 100MB after the files were copied back breaks the site again.
So the quota has to be left bigger than the size of the directory.
Thank you to everyone that might have been searching the answer for me.