I know its been a while, but im having the same issue.
I use Webmin and WU-ftp. I have a user setup that i can do anything with. He is in the wheel group. I can log on and use x just fine.
I can ftp user:localhost and it asks me for a password and then it says: 530 Login incorrect.
Im sure there is somewhere in Webmin i need to give access, and i thought it was in the Anonymous FTP access settings.
Any help would be great! I know i just need to switch one thing and it will work.