I seem to be digging a deeper and deeper hole. Obviously I'm a newbie to all of this.

I am using a Gateway laptop model 7422GX, xp pro sp2, vs2003 enterprise, framework 1.1 (updated), 2 asp 1.1, IE6, msde2000, sqlServer2005 Express

I am currently getting the following message when attempting to open an existing ASP.net 1.1 project via vs2003. I also get it when trying to create a new project.

"The web server reported the following error when attempting to create or open the web project located at the following URL: 'http://localhost/breakout3'. http1.1 500 Internal Server Error"

Here is the history of how I got to this point, and what I have tried to dig my way out.

1. Well over a year ago, I purchased a copy of XP Pro from Ebay so I could get IIS for my vs2003 ASP.net 1.1 project.

2. Several months ago, I started getting WGA messages telling me my copy was unauthorized. I lived with these for quite a while. I was able to do some windows updates for a while. One of these was IE7, which it then said it wouldn't install (but I think it started -- ie7.log and ie7.mainlog are present). Then it stopped updating at all (probably due to later/smarter versions of the installer).

3. I finally decided that I should have a legal copy and bought an OEM version from a local retail outlet. I tried to do an XP update, but it wouldn't do it. So I used the WGA option to enter a new serial #. It worked fine... I stopped getting the WGA messages, and it built a long list of windows updates. I tested my browser and vs2003 -- good.

4. Because I was preparing to install SQLNet Express, I installed framework 2, SQLNet2005 Express, and sqlserver's manager. I tested -- and both my current development environment and sqlnet manager worked ok.

5. I decided it was time to install the windows updates, so I initiated the update. It seemed to run ok. But when I went to use my browser, I started getting the:
 "Windows cannot find '(null)'. Make sure you typed the name correctly, and then try again"  message + all the empty windows.
My ASP.net application compiled and executed ok, but of course I had some problems with the browser.

6. I tried many of the options I found on this and other newsgroups, with special attention to deleting the HKEY_CLASSES_ROOT\CLSID\{c90250f3-4d7d-4991-9b69-a5c5bc1c2ae6} registry key even though the 2 offending updates did not show, and I had not tried a parallel install of ie7 beta. Interestingly, the key was there to be deleted, and the delete was successful, even after rebooting. However, as soon as I started the browser, I kept getting the same error, and in checking the registry, the key had reappeared. No amount of deletions got rid of the problem.

7. Nothing worked, so I got the bright idea to try going back to the restore point before the last windows update. Amazingly, the browser problem disappeared, and I was delighted with my decision. So then I started coding again in vs2003. However, I got the message
"The web server reported the following error when attempting to create or open the web project located at the following URL: 'http://localhost/breakout3'. http1.1 500 Internal Server Error"
with the "OK" "Cancel" and "Help" buttons.

Breakout3 is the folder/IIS virtual directory where I keep my development project. If I select the "OK" option of the error message, it says "refreshing project view... " and successfully finds and loads the folder with my project. Cool!!! Compiling works ok. However, when I tried to execute the web app, I get the message
"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 application event log of the web server. Please review this log entry to discover what caused this error to occur. 
The latest w3svc1 log file has the folowiong entries:
For the attempts to bring up the application into vs2003:19:10:39
Code: GET /breakout3/vs-127716767429861193_tmp.htm 200
19:10:39 GET /_vti_inf.html 404
19:10:39 POST /breakout3/_vti_bin/shtml.exe/_vti_rpc 405
19:10:39 GET /_vti_inf.html 404
19:10:39 POST /_vti_bin/shtml.exe/_vti_rpc 405
19:10:44 GET /breakout3/get_aspx_ver.aspx 500
19:10:44 GET /get_aspx_ver.aspx 500
For the attempts to execute the application from vs2003:
19:17:50 GET /breakout3/images/logo_springboard.bmp 304
19:17:55 GET /breakout3/Login.aspx 500
Typical wbemess log entry:
NT Event Log Consumer: could not retrieve sid, 0x80041002
iisadmpwd is empty, while iisadmpwd(2) has several interesting folders. Copying the iisadmpwd(2) folders into iisadmpwd did not help

the wmiadap.log has the following final entries:
(Fri Jun 01 13:41:49 2007.5150984) : Construction of the .NET CLR Data perflib wrapper failed hr = 80041001.
(Fri Jun 01 13:41:49 2007.5150984) : Performance library for .NET CLR Data: status is corrupt.
(Fri Jun 01 13:41:49 2007.5151140) : Performance library for .NET CLR Networking has previously been disabled.
(Fri Jun 01 13:41:49 2007.5151140) : Construction of the .NET CLR Networking perflib wrapper failed hr = 80041001.
(Fri Jun 01 13:41:49 2007.5151140) : Performance library for .NET CLR Networking: status is corrupt.
(Fri Jun 01 13:42:50 2007.5212593) : VerifyLoaded for PSched hr = 80041001.
(Fri Jun 01 13:42:50 2007.5212609) : Construction of the PSched perflib wrapper failed hr = 80041001.
One of the later http:err1.log entries contains:
#Software: Microsoft HTTP API 1.0
#Version: 1.0
#Date: 2007-05-31 03:21:34
#Fields: date time c-ip c-port s-ip s-port cs-version cs-method cs-uri sc-status s-siteid s-reason s-queuename
2007-05-31 03:21:34 1035 2869 HTTP/1.1 NOTIFY /upnp/eventing/rhumwqbhmv - - Connection_Abandoned_By_AppPool -

8. I've tried uninstalling IIS and restablishing the virtual directory. I've tried using "aspnet_regiis -i" with and without the "-enable" option. I've tried a couple of other suggestions I've found (short of uninstalling/reinstalling everything), but to no avail.

9. So then I decided to go back to the restore point before all of the updates. The browser is still ok, but I still get the asp.net message. I've searched all (including system and hidden) files and the registry, and can't seem to find references to breakout3 that could cause this problem.

10. I've tried restoring the most current restore point where I had the browser problem... the browser again has the problem, but unfortunatley I still have the asp problem (which was not originally present). So obviously this is a problem which was originally caused by using a restore point, but is not corrected by future restore points.

11. By the way, all this restore point changing has caused a lot of file renaming / extra files in windows/system32/. I've got several (2) and (3) files.

12. It still seems like I should be able to modify something simple so asp will work, given the fact the vs is still able to recover from the initial error by hitting the "ok" button.

13. Any help will be appreciated.