The Problem:
After completing the installation of SmarterStats (A web analytics package from SmarterTools Inc.) on Windows Server 2008 / IIS7, you are unable to login in when accessing the site through the IIS7. Attempting to log in with the correct credentials results in an error message indicating that the site/user/pass is invalid. This problem persists even though you follow the supplied installation instructions to the letter.

In my case I was able to log in perfectly fine when I accessed the site via SmarterStats built in web service, but not when I attempted the host the site through IIS. The other thing that really threw me is the fact that I had done this installation over a dozen times on IIS6/Win2k3 without any sort of hitch whatsoever.
The Resolution:
SmarterStats needs to be able to write it's configuration data at: "C:\Program Files\SmarterTools\SmarterStats\MRS\App_Data". On Windows Server 2003, this just works, no tweaking required. On Windows Server 2008, attempted writes to this path fail unless you take some specific actions. (They exacerbate the problem by masking the exception that gets generated and making it look like an invalid credential)
What causes this is a key difference between IIS6 application pools and IIS7 application pools (on a Windows 2008 server). In IIS6, app pools have a default identity of "Network Service". On Windows 2008 they have a default identity of "ApplicationPoolIdentity". The fix is to manually change the identity of the application pool that SmarterStats is running in to "Network Service", and give "Network Service" modify permissions on the App_Data folder. Once you've done that you should be able to log in normally.
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