AAACK!!
I have an old application that I moved to a new folder to make some changes and test them out. After moving the project files I update the webinfo file, create the app in IIS, etc.. to the get the web project to load. I go ahead and make some changes and not I'm ready to debug. All of the sudden I get hit with this message: "Error while trying to run project: Unable to start debugging on the web server. Could not start ASP.NET or ATL Server Debugging. Verify that the ASP.NET or ATL server is currently installed on the server."

I try browsing the site directly in the browser and get a 404 error. Hrm...something is up.
Tracking down things like this is really a resource hog. I'm trying to get some coding done and I spend way too much time just trying debug my app. Googling lead me down some narrow paths that were all the same...make sure, in IIS, the directory is an application, etc.. Someone has had this problem before, I know it. The development world is too large for me to be the only one dealing with this. If anyone has they've not blogged it/written about it...or I'm not as good at Googling as I thought I was.
Anywho, I eventually dig through support.microsoft.com and track down this KB article about Microsoft Security Bulletin MS05-004: ASP.NET path validation vulnerability. Reading through the article you will see a section concerning ASP.NET performance impact after you install the security update. In this section it references KB Article 894670 and this is the needle in the proverbial haystack.
Apparently it all comes down to a trailing backslash! Holy Cow Batman! This is on my local XP machine so this is screenie of the properties for my default site. Remove that little backslash and all is good.

Hopefully this will help someone else down the road.
Giddy Up!