When working with IIS 7.0 in Vista if you are seeing this failure trying to access the webserver, there are couple of things to look for.
1. Check if the Application Pool is running. You can click on the Application Pools option on the Left Pane of IIS 7.0 and check all running App pools.
2. You might have the URL http://+:80 reserved. Run netsh http show urlacl from a command window. If this shows an output similar to
Reserved URL : http://+:80/
User: NT AUTHORITY\NETWORK SERVICE
Then you have this port reserved which takes precedence over your http://localhost calls. Go ahead and remove this URL reservation by running the following command,
netsh http delete urlacl url=http://+:80/