IIS 7 Enable Virtual Directory browsing in a Domain
This time I ran in to the problem of accessing a virtual directory on another domain-joined server from an IIS7 enabled server.
After first installing IIS7 on the 2008 server, I added the virtual directory to the root of the Site.
Then when trying to browse it, it only gave me a "500 - Internal Server Error". Nice.
So, i read up on the subject and figured out I had to enable "Directory Browsing" for this to work:

OK so when I tried browsing it now, it still gave the dreaded "500 - Internal Server Error" !!
Well, turns out I have to give the IIS itself access to the Virtual Directory in question!
This is done by granting the "Network Service" user access to the virtual directory:
OK, now we're getting somewhere! Now when browsing, it gave me a "401 - Unauthorized access" !!
Last thing we need to do is enable the "Anonymous Authentication" as "Application Pool Identity" or the network service user so to speak.
And there we go!!
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