14,

Hi -- i'm wondering if the problem is not the permissions propagating as much as the appropriate permissions being supplied.  For a windows xp machine you should most likely be using ASP.NET machine account, not the network service account.

Here are the details just in case:

All applications must run inside a process. Under Internet Information Services (IIS) 6.0, ASP.NET Web applications run inside the IIS Worker Process (w3wp.exe). By default, this process runs as the Network Service account. Similarly, under IIS 5.0 (and IIS 6.0 in IIS 5.0 isolation mode), ASP.NET Web applications run inside the ASP.NET Worker Process (aspnet_wp.exe). By default, this process runs as ASPNET. The architecture of ASP.NET allows you to change this default functionality to run more secure Web applications.

Windows XP PRO uses IIS 5.0

thanks,

Ian