After about 4 hours battling with this error, and wondering why my website could not load, I managed to figure out what the problem was!  Since I have installed a trial version of Windows 7, IIS 7.5 works differently from Vista’s IIS 7.

So I did the following procedure to get rid of the error and now my website is up and running again on my localhost

  • go into Internet Information Services (IIS) Manager
  • expand node with your computer name on left side and select “Application Pools”
  • now in the window on the right side, right click “Classic .NET AppPool” and select “Advanced Settings…”
  • find “Identity” property and change its value to “LocalSystem”

That solved the problem!