I was at a customer site the other day, attempting to set up IIS web site for my web service (.asmx), but I kept getting the error message, "You are not authorized to view this page".  I couldn't figure out what was causing this and was trying everything from changing the permissions to deleting the web site and starting again, but nothing was working.
After a while I managed to get a different error message saying that the XML for the file, filename.asmx.cs, was incorrect!  What?  Then it dawned on me that I had written the web service against .Net 3.5, and so installed the .Net 3.5 re-distributable.  Great, the XML message disappeared, but the "...not authorized" page was back! Cry
So after a lot of playing around, I found that the following settings made the error message disappear:
1. Go to the Directory Security tab and put a tick in the box, Enable Anonymous Access, and un-tick the remaining four boxes.
2. Go to the web service extensions section and click the Allow button for, All Unknown ISAPI Extensions.
3. And I uninstalled the .Net 3.5 re-distributable and then re-install it.
Brilliant!  The XML message went away and so too did the error message. Cool
However, I then had a different message from my code saying that the user, NETWORK ACCESS, code couldn't access the Microsoft.Net x.x folder.  So I navigated to the said folder, and gave read & write permissions to the user, NETWORK ACCESS.
This finally solved my problem and I was away.  Hope this helps.