Hi, I've been battling with a similar problem.

I've got a new virtual server (Win2k8 64bit Enterprise) and can get other ASP.NET applications to run with custom application pool identities.

I can get DNN 4.8.4 to run fine, but if I try to upgrade it or do a fresh install of the latest version I keep getting the AspNetHostingPermission error.

By any chance do you know which folders require premissions to be applied?

Cheers Wayne

This is usually a permission issue for the "%SystemRoot%\Microsoft.NET\Framework\v2.0.50727\Temporary ASP.NET Files" folder, and on 64 bit machines there is the "%SystemRoot%\Microsoft.NET\Framework64\v2.0.50727\Temporary ASP.NET Files" folder as well.  On Vista and Windows Server 2008, just add the user account to the IIS_IUSRS group and you should be good.  By default, the IIS_IUSRS group should be a member of the IIS_WPG, so you might want to check to make sure that this is true.

You don't need to add the application pool user to the IIS_IUSRS group as the user automatically gets added when the application pool starts up. Check out http://learn.iis.net/page.aspx/140/understanding-the-built-in-user-and-group-accounts-in-iis-70/ for more info

Cheers Wayne