Figured it out. The 32bit ASP.NET Framework 1.1 had been enabled for IIS. I needed to which it back to 64bit ASP.NET Framework 2.0. Here's the link to Microsoft KB,
http://support.microsoft.com/kb/894435.
I should have picked up on this error earlier. I had a similar issues several months ago when installing another application. Thanks for all your suggestions. I'm uninstalling VMware Server.