I have attachments set to 0 so there is no limit for the usergroup. So that shouldn't be the reason, I also checked to see if anyother group was set to a limit and all groups are set to 0.

It would be either chmod settings or php.ini limitations.

Oh man this one was so simple but yet hard to diagnose, Ok it turns out it was a chmod issue, the main folder and the first level sub folders were all 777 that's why I couldn't understand what it could be but vbulletin will create even deeper sub folders for attachments and it was those higher subfolders that for what ever reason were not 777 so I chmod all the sub folders now to 777 and it fixed the issue. thanks again everyone for your input on this issue.