I'm really not sure whats going on there but a couple of things I can think of to look at.
I'm assuming taapsd is a virtual directory configured in IIS as an application for .NET 2.0
Look in the folder which corresponds to http://localhost (ie the folder at the root of Default Web Site) and see if there is another Web.config file in there. If so remove it as it may be interfering.
Also Vista has IIS 7, you may want to make sure you are using the "Classic" .NET app pool.
Everything worked for me on Vista, but recently I've gone back to XP so I no longer have a Vista machine setup to test myself.
Hope it helps,