FYI - I've found the problem and the solution @
http://www.asp.net/faq/ms03-32-issue.aspx.

NOTE: Because I have both the 1.0 and the 1.1 frameworks installed, I had to
comment out the line in the supplied batch file that checks for the 1.1
framework.  After that, problem solved!
 WinXP Pro w/IIS 5.1
 VS .NET 2002

 When trying to run the most simple web app from VS .NET, I get the following error:

 Server Application Unavailable
 The web application you are attempting to access on this web server is currently unavailable.  Please hit the "Refresh" button in your web browser to retry your request.

 Administrator Note: An error message detailing the cause of this specific request failure can be found in the system event log of the web server. Please review this log entry to discover what caused this error to occur.

 -----

 My account is an Administrator and is in the Debugger Users as well as the VS Developers groups.  IIS doesn't have any modifications to its' security settings (Anonymous access and Integrated Windows Authentication are checked).

 IIS is running as I can access non-.NET web pages from http://localhost/etc.

 Any thoughts?