Error: "HTTP/1.1 500 Internal Server Error"

I just installed IIS 5.1 and Visual Studio 2003 with .NET 1.1.

I'm having a problem starting an ASP.NET project. Everytime I select an
template from the IDE I get the above message.

I set up a default.htm page and the IIS server appears to be working. It
just won't let me start a new VS project. Does anybody have a clue why this
is happening?

BTW, the error also occurs on another computer on the LAN. Could this be a
conflict of some kind on the network?