4008 Event Message File Authorization Failed For The Request

I am trying to set up a web site on Windows Server 2008 using IIS 7.5. I have created a new application pool ( TestAppPool) and a new web site at c: inetpub wwwroot test. I have given the Read/Execute permissions to 'IIS AppPool TestAppPool' (using icacls). Authentication is just NTLM. When I try to access the site, a login prompt comes and will not let me through. I have followed through the instructions which I found at but still cannot access the web page. What do I need to do?
File Authorization Failed For The Request
IBM Fix list for IBM Web. Sphere Application Server V6. Abstract IBM Web. Sphere Application Server provides periodic fixes for the base and Network Deployment.
The event log contains the following: Event code: 4008 Event message: File authorization failed for the request.