Ok I think we are getting an error closer to a solution I think. Here's where we are at now.

Gift Peddie your responses are appreciated.

1.We reinstalled IIS again.

2. Reconfigured...

Thanks for the reply, I'm seeing two errors and one warning in the eventlog coming from W3SVC and DCOM.

W3SVC ERROR- EVENTID 1002 user N/A

Application pool 'DefaultAppPool' is being automatically disabled...

Ok I have reinstalled IIS and from what I can tell tell have set the permissions.

Now we are getting the following error when browsing report server in IIS and

Not quite sure what you mean about your suggestion to run aspnet_regiis in your C drive to resolve permissions related issues.

Can you please explain further how this would be done?...

Same Problem here. Anyone have it figured out?