this works fine for me
you can do it using javascript am posting my example and will explain you all
//this is the script write in head part of the page
<script type="text/javascript">
function showimg()
{
var path= document.getElementById('<%=txt1.ClientID %>').value;
document.getElementById('<%=img1.ClientID %>').src=path;
}
</script>
//your design should be like this i mean body of the page
<body>
<form id="form1" runat="server">
<div>
<table width="100%">
<tr>
<td>
</td>
<td>
</td>
</tr>
<tr>
<td align="left" width="40%">
<asp:FileUpload ID="file1" runat="server" />
</td>
<td align="left">
<asp:Button ID="btnview" runat="server" Text="Preview" OnClick="btnview_Click" />
</td>
</tr>
<tr>
<td align="left">
<asp:TextBox ID="txt1" runat="server" />
</td>
<td align="left">
<asp:Image ID="img1" runat="server" />
</td>
</tr>
</table>
</div>
</form>
</body>
//write this in your code behind
protected void btnview_Click(object sender, EventArgs e)
{
HttpPostedFile hp = file1.PostedFile;
txt1.Text = hp.FileName;
img1.ImageUrl = hp.FileName.ToString();
Page.ClientScript.RegisterStartupScript(this.GetType(), "aa", "<script language='javascript'>showimg();</script>");
}