The error may be either due to the service pack which you have installed or it may be due to the local securities settings.
Before installing the new service pack you could try changing the security settings of the IIS. For that purpose Go to: Control panel ->Administrative tools -> "Local Security Policy" and Click on local Policies, and then on user Rights assignments, Add ASPNET, SERVICE, Administrator as Useres to "impersonate a client after authentication" section. Then restart IIS and try debugging, if its not working further then you have to install the new windows service pack.
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