I still can't get it to work though the authentication box no longers pops up another problem has occurred, here is what happens when I follow your steps:
I select anon option as recommended:
http://img216.imageshack.us/my.php?image=authen0zr.gif
the login and password is autogenerated. Also when I check the options here with the projects which work, the details in this windows match theirs. but now when I try to access the site again this error shows up in the browser:
ERROR: 500 Internal Server Error
HResult: 0x80070005
Source: Microsoft SQL isapi extension
Description: Invalid virtual root settings
So what does this error mean?
EDIT: This is what happens when I try to run this app through VWD with Cassinni (by pressing f5):
http://img220.imageshack.us/my.php?image=vwdau6xx.gif
EDIT2: I tried to delete the Wrox directory and do teh setup process again as entailed in AppB, now I get a different error, this is so strange!
ERROR: 400.100 Bad Request
HResult: 0x80004005
Source: Microsoft SQL isapi extension
Description: Queries are not allowed