I am having a similar problem and I have followed all the suggestions outlined in this thread with no success.  I am installing in web developer express vice Visual Studio and don't know if that has anything to do with it.  One thing I do notice is that once I start the install - after fixing the web.config to point to a database in SQL server and creating the database in sql server - is that none of the images show up on the web pages - they all have the red x.  I have put the host header in the web.config to make it look like a root application in web developer express, but that does not seem to do it.

I have not actually loaded it up to a hosting site just yet, because I wanted to "mess" with it locally at first.  I'll do an upload to a hosting site and see how that works, but just wondering if others are having similar problems with DDN and visual web developer express.

Warren

So this is interesting.  I did two installs of DNN 4.8 using the exact same methods and one worked while one failed.   On the failed install, I see the same red x where images should be.  It seems somehow the http handlers are trying to run sp's.  You can verify this by say loading /Install/logo.gif which gives an exception instead.