>Any other ideas? BTW, I've got an older machine set up with the same configuration and it works just fine. There must be a config setting or something that I'm missing.

At this point I would create the directory manually, set it up as a web server and verify that it works as one. (As you did with the default web server. Then go in and ask .net to create a project.

If that still doesn't do it, I would open up all security settings and see if that makes a difference.
The times where I have seen this error are when I have multiple web sites on a machine and they do not reside under my default web site's directory.

>csproj?? Don't you mean vbproj? < g >
It's funny, I had posted a question yesterday and everyone who responded responded in VB. I like that "me." thing. That’s how my relatives in Ireland say things. Replacing me for my.

So, if me answer doesn't help, I'd be interested in hearing what it was when you do figure it out.