You need to grant the application pool identity, which is likely to be NETWORK SERVICE, access to C:\Domains\mywebsite.com\wwwroot\pictures folder. As indicated in the error message, do the following:

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To grant ASP.NET access to a file, right-click the file in Explorer, choose "Properties" and select the Security tab. Click "Add" to add the appropriate user or group. Highlight the ASP.NET account, and check the boxes for the desired access.

Explorer refers to Windows Explorer, not Internet Explorer...