I was an old time ASP.NET 2.0 customer and I recently upgraded my account to IIS7. I tried to get the default MVC project working but it failed with this error:

The view 'Index' or its master could not be found. The following locations were searched:
[Error trimmed]

It seems that no one else was having these errors. I also remember trying to write a custom file handler and could not get the web server to use it. I checked numerous times that the application root was set to integrated (instead of classic). As a last effort, I switched the setting to classic and it worked. But since the links do not have the aspx extension I got the 404 error if I clicked them. I switched back to integrated and everything worked. I'm not sure if this was a byproduct of the upgrade to IIS7 (to keep projects as compatible as possible). Let me know if this works for you.