To increase the SharePoint size limit along with the timeout you will need to change the settings in 4 locations.
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Before making changes to any of the web.config files please make sure to create backups before editing them. Also under no circumstances should you copy web.config files from one server to another. Doing so will break your environment.
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1. Central Administration à Application Settings à Web Application general settings à Change your Web application URL then update the Maximum upload size
2. Update the Web Application’s Web.config file that you increased in step 1. In my case I am updating the 80 web application which is located under C:\inetpub\wwwroot\wss\VirtualDirectories\80\web.config
Replace:
with
3. Update SharePoint web services Web.config under C:\Program Files\Common Files\Microsoft Shared\Web Server Extensions\12\TEMPLATE\LAYOUTS
Typically you only need to update the upload.aspx section but in my case I was using a custom code that uploaded documents via the copy.aspx web service so I had to include that section as well since it is not in the web.config out of the box
4. If you are running windows server 2008 and still having issues uploading larger files add the following under the <configuration> section into your web applications web.config file from step 1
