I run into 500 - Internal Server Error when PUT/DELETE with windows 2008 server IIS. The response I get is:
I had the same issue recently on my Win Server 2008 R2 / IIS 7.5 and it took me couple of hours just to found out it was caused by LiveStreamingHandler. LiveStreamingHandler module on the IIS causes the PUT and DELETE HTTP verb error.
Uninstall the Media Services 4.1 with Add and Remove program and reboot the server fixes this issue. Hope this help someone.