IIS installs usually with windows and I checked it (made sure i can start a web site) before installing visual stuido.net which installs the .net framework.
I was able to resovled the problem, however, i'm not sure really what the problem was. There were so many chain of events and tweaks that i did, it's not clear to me what the cause is. I certainly don't plan on recreating it---- i can tell you that.
To sumarized as easy as possible without all the tweak hype, this is what i did
0.) INstalled asp.net 1.1 See knowledge base article #306005.
1.) DEinstalled framwork 1.
2.) DEinstalled ISS 6.0 (i recommend to anybody reading this to deinstall any other ISS versions on your computer as well
3.) REinstalled ISS 5.1 (not 6.0) from the orignal Windows installed.
4.) INstalled framwork 1.1 (the download from microsoft web site; dotnetfix.ex package
Note: DO NOT REFER to KB article #306005 if you running a desktop web server, otherwise, do what #817267 recommends FIRST before proceding to steps 0 thru 4. A desktop web server mean this: your running a web server on your local computer. Your web pages are being server from you local computer, NOT FROM a network based microsoft windows server (ie Windows Server 2003
I suspect the problem for many (desktop server clients) lies in the installation of vs.net if ISS has already been installed on their machines, eEspecially for XP operating system which install ISS automatically. For clients that are connecting to a real server such as Wndows 2003, there problem is usually a extension setting (#817267) that needs to take place in the ISS manager. In between that, you have the tweaks to install aps net 1.1 via command console.
I'm uncertain what would happen if you don't do #0 in the protocol above. I was under the asumption that VS.net installs aps.net automatically, but do to security, something in that process has changed. It's unfornatute, because you can spend hours to days ( i wasted two days of my time) on this one problem if you want to develop web pages. Not a good introduction to .NET. Certainly, this area needs some work by microsoft