I just now created a completely new installation and then tried to edit the imagecache "product" preset and received a similar error:

warning: rmdir(C:\Documents and Settings\Aaron Hawkins\My Documents\websites\buddyhawkins-photo\sites\default\files\imagecache\product) [function.rmdir]: Permission denied in C:\Documents and Settings\Aaron Hawkins\My Documents\websites\buddyhawkins-photo\sites\all\modules\imagecache\imagecache.module on line 680.

also when I view the product after this change has been made the product image has disappeared. When I go back and erase the action that I added to the product preset the image on the product returns.