If you have a problem with "Use Local IIS Web Server" in "Microsoft Visual Studio 2008" and Windows 7 or Windows Vista use this road map with solve it ...
trust me ... it's works
Failed to generate a user instance of SQL Server due to failure in retrieving the user's local application data path.
Please make sure the user has a local user profile on the computer.
The connection will be closed.
Goto: Control Panel > System and Security > Administrative Tools > Internet Information Services (IIS) Manager
Then goto: Application Pools > Set Application Pool Defaults... > set Load User Profile toTrue
ASP .Net 2.0 (.Net 3.5)