The link  shows up in two places. Checking to see if its missing  in both places
may tell you something about what is causing it. First, there is the menu entry
on the upload  menu. That can be removed using a HideCustomAction feature.
Second is the link on the regular upload dialog itself. If you click the Upload
menu or the Upload a file from the menu you'll get an upload dialog box. There
is a link just under the Browse text box that will also allow you to upload a
file. The presence of that link is controlled by a javascript that runs on the
client. The Javascript checks for the presence of the activeX control and shows
the link if its available and hides it if its not. If the ActiveX control is on
the client  and hasn't been blocked by security policies in IE, then the link
should show. Whether it works or not may be a different matter, but it should
show up.