If you are running 64 bit OS I suggest that you should enable 32 bit application for IIS. Right click on the Application Pool and select "Advanced Settings" then "Enable 32-bit Applications." Also, try changing the application pool from Default to Classic .NET AppPool. Check out whether you have configured your web server to handle ASP.Net extensions. Make sure that ASP is installed (by default, ASP is not installed with IIS)
The errors you see are most probably related to the configuration of the IIS server and the .NET version that your Application Pool uses. For instance, you are trying to set up a website that is build against .NET 3.5 or 2.0 under IIS server which application pool runs .NET Framework 4.0 or some similar combination.
The project manager and installation process is optimized in Sitefinity 4.0 where we included built-in Project Manager.
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