CF9 install glitch on Win2008/IIS7.5

Does any of this sound familiar, anyone have ideas?  I saw a few posts from a long time ago that were a little similar, but not quite the same.

I installed a copy of CF9 Windows 64-bit on my test/dev server.   The server is Win2008 with IIS7.5.

Before installing CF I opened http://localhost in a browser, and got the IIS default screen.

After going thorugh the CF installation (all options, all IIS sites, developer edition), when it successfully completed and tried to move on to the configuration step I got this error when the browser opened:
Http error 500.19
Cannot read configuration file due to insufficient permissions
\c:\inetpub\wwwroot\cfide\web.config

Actually, when I look in the directory, there is no web.config file

*PLUS* when I refreshed the screen that had browsed http://localhost, it now gets
401 - Unauthorized: Access is denied due to invalid credentials.
You do not have permission to view this directory or page using the credentials that you supplied.

Now I know this sounds like a permissions problem, and maybe it is, but I'm logged in as an Admin.  The same login that I used on my other dev server (running win2008 but with IIS 7.0 not 7.5), and that install went smooth.  Plus, there's that bit with IIS no longer being able to get to its spash screen - no CF involved there, unless the ws config messed things up during the CF install.

I tried rerunning wsconfig, but it says that the webserver has already been configured with all options.

The IIS config has Application Development and IIS^ Metabase Compatiblity installed.

Ideas?

thanks

-reed