This is what fixed it for me:

Resolution for Windows 7 and Windows Server 2008 R2

For all web applications running under IIS 7.5, regardless of their project type, carry out the following steps:

1. Run the Internet Information Services (IIS) Manager tool.  This tool can be accessed either from the Administrative start menu, or by typing "inetmgr" in the Windows Start-->Search textbox and selecting the inetmgr tool.
2. In the left-hand pane of the IIS Manager tool expand the machine node.
3. Click on the "Application Pools" node so that the application pools display in the main window of the management tool.
4. If you are troubleshooting an ASP.NET 2.0/3.0/3.5 application select the "DefaultAppPool" application pool.  For ASP.NET v4 select the "ASP.NET v4.0" application pool.
5. Right-click on the selected application pool and choose "Advanced Settings"
6. In the "Advanced Settings" dialog box find the category called "Process Model".  The first row in the category will be the "Identity" row.
7. Click on the "Identity" row and then click on the small button that shows on the right-hand side of the value cell.  The button displays the text "…"
8. A dialog box called "Application Pool Identity" will popup.  Within that dialog box there are two radio buttons.  Make sure the first radio button titled "Built-in Account" is selected.
9. In the dropdown box below the radio button choose "Network Service" for the identity.
10. Click "Ok" to close out the "Application Pool Identity" dialog box.
11. Click "Ok" to close out the "Advanced Settings" dialog box.
12. At this point the changes to the application pool identity will have been saved to IIS 7.5's configuration store.