Sometimes you just feel a little slow on the uptake. I put the pieces together and realized something. In the wiki entry on using FOG with FreeNAS, the instruction is to create 2 separate datasets --> images and images/dev. This is what sets up the different mount points that gives a problem with ftp in FreeNAS.
I deleted the 2nd dataset from FreeNAS and then went into the shell in FreeNAS to recreate the dev directory under images. I recreated the .mntcheck file and set the permissions for the FOG user. The rename of a directory from the windows ftp client now works to rename from images/dev/test to images/test so now the FOG image should work.
Would someone please update the wiki to not create 2 datasets, please?