I think you misunderstood my request about a new web site. I didn't mean a new deployed web site in IIS, but simply a new one in Visual Studio. E.g.:
1. File | New Web Site
2. Add a Model to your database. When asked for a connection, use . (a dot) as the server name.
3. Add some code to target your new entities.
I have the feeling you're making this a bit harder than it needs to be by using lots of different connection strings copied from different projects targeting different SQL Server. By starting from scratch, you can easily target EF correctly and see what connection string it adds to your project. You can then drop the other connection strings and just use the new one.
I find that my option is currently set to True. Is this correct for a Vista
IIRC, this is the default for Vista.
Just curious: are you trying to make this work under IIS on Vista to understand how this all works? Or just to reproduce and fix the EF problem? In the latter case, I would skip it. IIS on Vista is not a good platform to host production sites. If it's all about learning, then it's well worth the time of course.