I have an IIS7.5 web-site, on Windows Server 2008, with an ASP.NET MVC2 web-site deployed to it. The website was built in Visual Studio 2008, targeting .NET 3.5, and IIS 5.1
Typically I encounter this issue when there is a Routing problem. I compare a working vs non-working to resolve it.
Today however I accidentially created a Virtual Directory in IIS.
It has to be an Application, right click on the Virtual Directory (with a folder icon) -> Convert to Application: