Another wordpress on IIS issue. Let's see how to solve it. I googled around about this a lot and finally this solution worked for me.

Basically what I had to do is create a new user and give it permission to the WordPress folder and it worked like a charm.

Solution

In IIS manager

  1. Go to Application pools and choose the one used by your Wordpress Blog.
  2. Right, Click and choose Advanced Settings.
  3. Change the Identity to LocalSystem
  4. Click OK to save changes.

Then on Sites,

  1. Choose your Wordpress Blog from the sites list
  2. Right Click on it and click on Edit permissions
  3. Go to security tab and click on Edit... (Group or user names)
  4. Click on add and type "Authenticated users"
  5. Click on Check Names to validate the username
  6. Click OK to save changes.

Thats it! Hope it helps.