This issue occurs when the file upload operation uses an XMLHTTPRequest (XHR) API that uses FormData objects. Specifically, the upload fails if the request is challenged for authentication.
To fix this issue, install the most recent cumulative security update for Internet Explorer. To do this, go to Microsoft Update. Additionally, see the technical information about the most recent cumulative security update for Internet Explorer.
Note This update was first included in the MS16-051: Security update for Internet Explorer: May 10, 2016.
Microsoft has confirmed that this is a problem in the Microsoft products that are listed in the "Applies to" section.
Learn about the terminology that Microsoft uses to describe software updates.