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Event ID: 1088 Source: ASP.NET2.0.50727.0

Failed to execute request because the App-Domain could not be created. Error: 0x80070005 Access is denied.
See also the comments for Event id 1088 from ASP.NET 1.1.4322.0, the event is similar but it applies to a different .Net version.
See ME943598 for a hotfix applicable to Microsoft .NET Framework 2.0.

This issue may occur if you try to run the ASP.NET 2.0 application after you perform an in-place upgrade of the existing Windows Server 2003 installation by using a Windows Server 2003 CD that is integrated with Windows Server 2003 Service Pack 2 (SP2). See ME933638 to resolve this issue.
In out case, it turned out to be a missing group (NETWORK SERVICE) under the security folder of our website.

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