It seems to happen on almost every site and does not matter if it is an ASP or .NET website. if you refresh right after you get that error it goes away and won't come back by just hitting refresh a bunch of times. I have two servers working with load balancing for IIS. EDIT Also these are valid paths for folder names. The pages connect to a Microsoft SQL databse on aother server. Application pools are setup to use a different domain user for all of the A websites as well as for every other letter of the alphabet as instructed by microsoft. Each website has its own application pool. EDIT
My original answer got eaten by an error, so here goes the short version:
The error says it's probably permissions, but this looks like an assumption based on what it was trying to do at the time. Connectivity looks like a good possible additional cause.
The error is from the Static File Handler, which implies any active content wasn't executing; the request wasn't yet authenticated. So app code isn't implicated here.
The content appears to be on a UNC share.
A network capture seems like it might help if it covers a problem instance.
App Event Logs would probably also help, if there are any relevant entries.
In short: could be that the client (IIS) and the file server aren't always on good terms; looking at network-related problems seems like the right approach, assuming the SMB-related due diligence (MaxCmds etc) is already sorted out.
Try "not" load balancing the servers to see if one of the servers is responsible.
The error also states "Error Code 0x80070035", which is outlined in detail on Microsofts site: http://support.microsoft.com/kb/942031.
The error basically means "Access Denied", the folder cannot be accessed by IIS, I would start by checking the permissions of that folder. You will want to ensure that IIS has at least read access to that folder and the files within. If the website utilizes scripts, you will also probably want to allow execute access on the scripts.