.

can anyone help?

First, is this ASP.NET or ASP Classic, there is a difference and ASP.NET wouldn't normally use the IWAM account.  The answer to your issue is usually this:
http://support.microsoft.com/kb/276407
Jeff
Please:  Don't forget to click "Mark as Answer" on the post that helped you.  That way future readers will know which post solved your issue.

this is ASP.Net, trying to create projects in VS 2003.  I recieve that error.

PLEASE HELP VS is uesless to me unless I get this issue fixed!!

Hi,
It seems that there are two versions of ASP.NET to run in the same application pool. 
If so, you can try the follows:
Restart the IIS before you create a new ASP.NET 1.1 application. At the command prompt, type the following command:
iisreset 
-or- 
Create an ASP.NET application in a separate application pool. Create the script-mapped application (ASP.NET 1.0) in a separate application pool -- for example, in the ScriptMapappPool application pool. Then, create a new ASP.NET 1.1 application in an application pool other than ScriptMapappPool.  
For more information, see http://support.microsoft.com/default.aspx/kb/822319
I look forward to hearing from you. 
Thomas Sun
Microsoft Online Community Support

Please remember to click “Mark as Answer” on the post that helps you, and to click “Unmark as Answer” if a marked post does not actually answer your question.