The problem is caused by IIS not supporting FrontPageExtensions. The method for creating a website on http is intended so that you create it on a remote location, where FrontPageExtensions are supported. Locally you can click the Browse
button and select IIS from the pop-up screen and choose a virtual directory/website on which you want to create the Sitefinity project.
Please take a look at this forum post
. I suggest that you should take a look at this blog post Installing Sitefinity 4 on IIS 7
the Telerik team
Do you want to have your say in the Sitefinity development roadmap? Do you want to know when a feature you requested is added or when a bug fixed? Explore the Telerik Public Issue Tracking
system and vote to affect the priority of the items