I developed a simple web application. A label and a button. On click of Button, the label will display Hello World.
When I deploy this web application on my web server
I changed the Identity of the application pools to use LocalSystem account as opposed to Network Service. Recycled the Application pools and everything was ok. This resolved it for me. I think there is an underlying issue with the "Network Service" on my server as I had problems with SQL using this account. Again just used LocalSystem during the install to get passed that also.