This confirms that the compression directory has been re-created. On the next day, at recycle time, there was no more error logs in regards to the compression. This is as is despite the fact that the compression has been disabled. So, there are checkups being done by IIS in either case. If it comes back again, I will provide a follow up. But, for now, this seems that those errors were created by the account having lost its privileges to that directory.

I do not know if this is related to the worker process issue. For now, this will run as is. If It runs ok for several weeks, we will enable back the compression. If this was all related to the privilege issue, then we'll have an explanation.