Rachel:
For this assignment type, you will want to go in and "grade" the assignment (click "View x submissions), but the teacher will will now have the option of uploading one or more response files during grading, which I think is what you are asking for (and the student can resubmit, etc.)
This may help:
http://docs.moodle.org/en/Assignment_submissions
http://docs.moodle.org/en/Advanced_uploading_of_files_assignment
Assignment
Tracking versions of assignment documents
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