After restore: Invalid permissions detected when trying to create a directory. Turn debugging on for further details.

I was able to resolve the issue. In Windows IUSR and IIS_IUSR need modify the the entire contents of moodledata. After I copied my restored moodledata into place I did a recursive reset of permissions and ran into a number of directories that would not reset. I had to go to each directory one by one and manually toggle inherit permissions and other Windows tinkering. Once IUSR and IIS_IUSR had modify access to all of moodledata everything worked.

So for Windows and SQL, to restore moodle, restore the database and moodledata and make sure the permissions on moodledata are correct.

Thanks for the reponses, Ken.