Here is the Solution:
1. Check if IIS is properly configured
a) Open the Control Panel and click on Programs and Features. In the left pane, click Turn Windows features on or off.
b) Expand Internet Information Services. Expand Web Management Tools and then expand IIS 6 Management Compatibility.
c) Select the IIS Metabase and IIS 6 Configuration Compatibility check box.
d) Click OK to start the installation process.
2. Check if the logged on account has ?Administrative? rights. Else assign administrative rights.
Or else
a) Explicitly run Visual Studio as administrator. We must run Visual Studio 2005 in the context of an administrator account before we can develop web applications on Windows Vista. By default, Windows runs applications in a limited-privilege user account even when you are logged on to the computer as an administrator.
b) To run Visual Studio 2005 with administrative privileges in Windows Vista, click Start -> All Programs. Then, right-click on Microsoft Visual Studio 2005, and then click Run as administrator. Update: Related Article Links have been added