Mike,

I think your problem is actually IIS configuration related. IIS listens on port 80 - the standard for HTTP traffic.

IIS can support multiple web sites but it has to have a way of distinguishing them. In a live server, supporting dozens of sites, it's done via the 'host header' - in essence the url the web browser has in its address bar.
IIS sees a request coming in for www.site.com and routes it to the site. A moment later it sees a request for www.othersite.co.uk and likewise routes it to the othersite.

Typically on a dev machine your web browser is trying to go to http://localhost - IIS has no way of knowing what site you want.

That's the logic behind putting entries in the hosts file. If you have an entry in the host file for (say) www.site.com mapping it to 127.0.0.1 then you can type www.site.com into the address bar of the browser. The browser puts it in the host header. The hosts file still routes the request to 127.0.0.1 and your local IIS can distinguish the sites based on host header. QED.

That's probably why you are having trouble with your second install.

 No Mike, the iUsers sould not have anything todo with the app pool!  The IUsers is the usergroup, that allows annonymous users to Access the IIS, to read the Websites.  If you don't have this permissions you always get a 404 error about Access is denit!

App pool user in form AppPoolUser\WebsiteName or Username (Special created on your Users) or Network Service must have full Access.  Also on Handler Settings on your IIS you mast set permissions to execute scripts and executables.