I recently upgraded from Visual Studio 2010 to the Visual Studio 2012 RC. The installer also installs IIS 8 Express which Visual Studio now uses as the default web server.
I am not sure if you have edited right configuration file. Try following steps
open %userprofile%\ducuments\iisexpress\config\applicationhost.config
By default bellow given entries are commented in the applicationhost.config file. uncomment these entries.
<add name="WebDAVModule" image="%IIS_BIN%\webdav.dll" /> <add name="WebDAVModule" />
<add name="WebDAV" path="*"
verb="PROPFIND,PROPPATCH,MKCOL,PUT,COPY,DELETE,MOVE,LOCK,UNLOCK"
modules="WebDAVModule" resourceType="Unspecified" requireAccess="None"
/>