Scott Gu sheds some lightforum post
To setup you app to use IIS, just launch the IIS admin tool and create a new application that points to the root directory of your project. Then within VS 2005 choose “File->Open Web Site” and click the “Local IIS” option on the Left (like a large My Documents icon). This will show the list of apps under IIS -- you can then pick the one you want to open.
To create a local IIS virtual directory in Visual Web Developer
Re-installing IIS did the trick. Visual Studio (2005 in this case) can now access the metabase, and re-opening the solution from source control (TFS in this case) auto-created the sites on my local IIS when it was pulling them. Rock on.This page
1. In Visual Studio, on the File menu, click New and then click Web Site.
2. In the New Web Site dialog box, click Browse.
3. In the Choose Location dialog box, click the Local IIS icon.
In my current struggle, I realized I had no Local IIS icon - though I did confirm I had a Visual Web Designer part installed with VS 2005. Later found out Visual Studio doesn't think I'm in the admin group of the local machine. Trying to check out MetaACL (Google it) - but ... also going to try and re-install IIS..
has the error I was getting and has some good discussion as to why - in my case, it was due to a sub-folder WAP, but the bigger problem being the above.