I am using an HttpModule to do some URL shortening on my site. I am using Visual Studio 2008 and IIS 7, and .Net 3.5.
When the module is specified in the sys
If you are running on IIS 7, put the module in:
<configuration>
   <system.webServer>
      <modules>
         <add name="MinimizeModule" type="ClipperHouse.UrlMinimizer.MinimizeModule" />
      </modules>
   </system.webServer>
</configuration>
If you are running on Cassini (Visual Studio's integrated miniature web-server), put the module in:
<configuration>
   <system.web>
      <httpModules>
          <add name="MinimizeModule" type="ClipperHouse.UrlMinimizer.MinimizeModule" />
   </system.web>
</configuration>
IIS will crash if you give it the Cassini location.
Cassini will crash if you give it the IIS location.
Whenever i deploy, i have to be sure not to deploy web.config. i also include the notes in web.config:
<system.web>
   <!--The Cassini location to add modules (comment out for IIS)-->
   <httpModules>
      <!--WARNING: IIS will crash if you leave this in here.
          IISBUG: IIS doesn't support system.web/httpModules, 
          and Cassini doesn't support system.webServer/modules
      -->
      <!--Comment out for IIS-->
      <add name="PerformanceHttpModule" type="DummyPlaceholder.PerformanceHttpModule"/>
   </httpModules>
</system.web>
<system.webServer>
   <!--The IIS7 location to add modules (comment out for Cassini)
   <modules runAllManagedModulesForAllRequests="true">
      <!--IIS7 will crash if you present a system.web httpModules. -->
      <remove name="PerformanceHttpModule" />
      <add name="PerformanceHttpModule" type="DummyPlaceholder.PerformanceHttpModule"/>
   </modules>
</system.webServer>
IIS's left hand doesn't know what Cassini's right hand is doing - and they both screwed it up.
Did you try also putting the module declaration in the element? When running in dev using Cassini, that's usually the place I have to put modules to get them running.
Cassini, the development web server provided with IIS uses the IIS6 module syntax, so you must duplicate the module add like so
<system.web>
  <httpModules>
    <add name="MinimizeModule" type="ClipperHouse.UrlMinimizer.MinimizeModule" />
  </httpModules>
</system.web>
<system.webServer>
  <validation validateIntegratedModeConfiguration="false"/>
  <modules>
    <remove name="MinimizeModule" />
    <add name="MinimizeModule" type="ClipperHouse.UrlMinimizer.MinimizeModule" 
         preCondition="managedHandler" />
  </modules>
</system.webServer>
Note that I've also added a precondition to your IIS7 settings