Just in case anyone else out there hits this issue. A friend called me yesterday asking for help troubleshooting a TFS installation problem. After installing TFS and "doing everything right" he still got 503 Service Unavailable messages. I logged in and this repro'd in the TFC client and straight browser. http://localhost/reports worked but nothing else did.
Reviewing the system event log showed the problem to be that the two new accounts created for TFS were having trouble logging in at startup. In the user account manager I discovered that both were set to require a new password at first login. Since these were system accounts that had been initialized with a secure password, unchecking that box (and restarting for convenience sake) fixed the problem.
There are undoubtedly countless other causes of 503 Service Unavailable. But if you're running low on troubleshooting ideas try checking the system event log for clues. Hope that helps!