My understanding is that IIS7.5 does it that way for security purposes, but for your purposes I wouldn't worry about running just network service for all the sites right now. Otherwise you are going to have to setup permissions for each of the individual apppool accounts that would be created.

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Chris Hammond
Former DNN Corp Employee, MVP, Core Team Member, Trustee
Christoc.com Software Solutions DotNetNuke Module Development, Upgrades and consulting.
dnnCHAT.com a chat room for DotNetNuke discussions

Sebastian is correct. Also, if you're using IIS 7.5 (Win 2008 R2), you should be using "AppPoolIdentity", not "Network Service" for you AppPools. The reason Microsoft changed this, in brief, was that the Network Service account runs a number of services on the server. Should the Network Service account encounter and issue, all the services it runs will fail. Using the AppPoolIdentity eliminates this issue and gives each site its own low-privileged account to run under.

I blogged about this here for reference.

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Hi Chris,

Thanks for your note and link to blog post.  The server is running 2008 and IIS7.  Therefore, when I try to select an Identity under Application Pool Advanced Settings, I'm presented with the options LocalService, LocalSystem and NetworkService.  ApplicationPoolIdentity is not a built in account.  Should it be?

If I'm missing ApplicationPoolIdentity, how do I set it up in IIS7?  Or, is this just pertinent to IIS7.5?  Given above existing identity choices, which one should I use?  Once this is rectified, I'll set up permission so that the app pool (identity) has ful control on c:\dnn.

Thanks so much for your help!
Sid