IIS7 problem

I've asked this in an IIS forum and didn't get very far.
I use visual studio net. I have IIS7 installed on my laptop (Vista
Business). I have II6 compatibility turned on. My user account is an
admin.

I have an ASPX site that is currently under development, within that
site is folder that contains ASP pages. While in VS2005 I press F5 to
launch it in IE7.
I get the message that asp pages cannot be served. I check IIS7 and
asp is turned on and script execute permitted. Note that I can run the
ASPX pages no problem.
As by default this is launched (VS debugger) to the personal
development server as opposed to IIS (I forget what you call it) and I
can find no way to config this app I set the default server to be IIS,
created a virtual directory, pointed it to my VS2005 project folder
and set the start URL to be http://localhost/myappname now I just get
a message saying that the apps configuration has not been set up
correctly.

I've not had this problem with previous versions of Windows or IIS so
can only assume it is a Vista/IIS7 "feature"
Anybody have any idea what is preventing me from doing this very
common thing?