Doctor Who said:
That was a good idea. I decided to make a simple default.html file with "Hello World". Then I tried to see it on my machine, and that failed. The error I got was:
HTTP Error 500.19 - Internal Server Error
The requested page cannot be accessed because the related configuration data for the page is invalid.
||Cannot read configuration file due to insufficient permissions
So, this is a different issue. In this case I was using Expression Web. I'll try making a VS 2008 ASP.NET simple web app and see what I get.
Apparently your website have both "Anomymous access" and "Windows Intergrated Authentication" turned on.
When you visit the website at local computer, you're accessing it as a local user (assumably one of the Administrators), so the server process reads the configuration files fine.
When you visit the website at other computers, you're accessing it as "IUSR_<machine name>" and "Network Service", so the web server cannot read the file and gives HTTP 500 errors.
Granting "Read" permission for both users for your web application folder and you should be fine.