I was working with a customer today on an issue.  The customer had a custom VS project that he had inherited from another developer who had since left the company on other pursuits.  While the original developer could work in the solution just fine, the new developer was receiving the following error message:

Visual Studio .NET cannot create or open the application.  The likeliest problem is that required components are not installed on the local web server.  Run Visual Studio .NET setup and add the web development component.

Naturally the first thing I tried was to repair IIS with the following commandlines:

cd %windir%\Microsoft.NET\Framework\v1.1.4322
aspnet_regiis -i

That didn't fix the error, though I didn't really expect it to - the .NET extensions were all already properly mapped in IIS.  The solution was (unlike all of the recommendations that I found online to run the aspnet_regiis utility) to fallback to the same solution that had solved another issue a long time ago:  to delete the VSWebCache folder.

The VSWebCache folder is created automatically by Visual Studio when you open/create a web project and can be found in <root>\Documents and Settings\<user>\VSWebCache\<machinename>.  Simply delete this folder and VS will recreate it when you attempt (now successfully) to open the web project.