I created a virtual directory called test (C:\test) under the Default Web Site and added two simple test files (one html and one aspx). I thought I had to add the IUSR and NetworkService (for application pools) to C:\test and grant the users appropriate rights in order for IIS7 to serve the content.
It appears that is not the case at all as I can view any files in the virtual directory (even if I convert it to an application) without changing or adding any security settings on the C:\test folder.
I just installed IIS7 with ASP.NET on Windows 2008 without changing any settings besides adding the virtual directory. Am I missing something? Even my book on IIS7 states that the user accounts should be added an appropriate rights should be added.
I added the following to answer the comments:
I am referencing the file using a public IP http://xxx.xxx.xxx.xxx/test/one.html and the IP nor localhost is in my trusted sites. I am not signed in on the server at all as I am accessing the content from my home machine and the content is on my production server. The following users/groups have access to c:\test on the server (Creator Owner, System, Administrators, Users) and the app pool is running under the default NetworkService account.
I basically installed win2008, added the IIS role with asp.net. I then opened IIS7, added a virtual directory and copied two files to the directory to test. It works which is great but I want to understand why it works. How is it that IIS7 can access files in the C:\test folder without any permissions set.