Thank you for your response. The system did work prior to setting the sessionState to SQLServer.
ASPNET has been assigned to both the ASPState and TempDB databases. Also the datareader and datawriter has been given access to both databases. I have assumed that giving select, insert, delete, and update access to the tempdb table would be the responsiblitly of the ASPState stored procedures, but you are right they do not do the job. I have given this access to the ASPNET account.
Even after all of this, the system crashes. I would believe that the mmDataSet is not serializable from the error message I got.
Okay, here's how I got it to work....: ASPNET User has to be given DBOwner to ASPState DB and DataReader/DataWriter to TempDB. Try that - it should work!