I was working on a post @ http://forums.iis.net about a permissions issue. One of the first things I recommend is use Process Monitor. I honestly think this tool should be built into the OS. My 3 suggestions, do you run Filemon, Regmon and is auditing of "Audit object access" failures enabled? Between these three items, you can rule out most any permissions issue.
//Process Monitor info
http://technet.microsoft.com/en-us/sysinternals/bb896645.aspx
//Sysinternals homepage
http://technet.microsoft.com/en-us/sysinternals/default.aspx
//Enable Object Failures in Local Security Policy.
Here is an image of what I'm referring to. Once this is enabled, a failure will show up in the Security event log.
Hope this helps,
Steve Schofield
Microsoft MVP - IIS