I have exactly the same error message and I was figuring this out for 3 days, until finally I was able to 'conquer' the error.
Notice the Version Information at the bottom of the error page. If you are developing under VS.NET 2003, try to use framework v1.1.4322, if you are developing under VS.NET 2002, try using v1.0.3705
I have 3 versions of .NET framework installed, v1.0.3705, v1.1.4322 and v2.0.40607 and I'm seeing the following at the bottom of the error page:
"Version Information: Microsoft .NET Framework Version:2.0.40607.42; ASP.NET Version: 2.0.40607.42"
and then I went to
2. aspnet_regiis -u (to uninstall version 2.0 of ASP.NET)
4. aspnet_regiis -i (to install version 1.1 of ASP.NET)
At this point better to restart your machine and after reboot, try to launch your web app again.