Yes that's how I was doing it, and still getting the error BUT - I asked my server support people to increase the php.ini file to 100mb and it's now working. I needed it quite large because a lot of the courses I do have video files in them that are anywhere from 20mb to 70 mb depending on length.
I tried doing it myself through cPanel, as in the instructions from:http://virtualizesharepoint.com/2011/05/16/maximum-file-upload-size-in-moodle/ .... and it didn't work. They explained that because I have a dedicated server that it needed to be done by them - it was a change I couldn't do.
Thanks for your help and steering me in the right direction!
I hope my experience helps others too.
Kate