IIS Authentication Problem?

[Les P]

Hi,
Since '95 I have been a contractor develoing applications using Borland
Delphi (Object Pascal) creating win32 C/S stuff.
Having recently completed amy last contract I decided to try my hand at
dotNet stuff.
I downloaded the trial version of Visual Studio 2003. So far I learned some
C# for win32.
I like C# very much (very similar to Object Pascal) and want to extend my
experience to ASP.NET
web applications.
Via Visual Studio 2003, when I attempt to "File>New>Visual C#
Projects>ASP.NET Web Application"
into "http:/localhost/MyFirstWebApp"
I get the response:
"The Web server reported the following error when attempting to create or
open the Web project located at the following URL:
'http://localhost/WebApplication1'. 'The server returned an invalid or
unrecognized response'."

So I figured that there must be an authentication problem.
I snooped around this forum and tried every thing previously sugggested such
as uninstalling and reinstalling the prerequisites and VS2003 in the proper
sequence without any success.
The rean across the "AuthDiag" tool.
I ran it. with the results below.

I am running 1 laptop on XP Pro with a wireless MS WorkGroup network
connecting to the internet.

I can't tell if the diagnostics below are related to an SMTP Domain or a
network Domain.
Question:

I don't know how to approach any of the diagnostics below!
Which domain is it referring to and how do I correct the problem?
I need to remove all negative diagnostics!
Any help will be greatly appreciated!
Thanks in advance,
Les

==== Authentication Results from "AuthDiag" ===== below:
Authentication Results Url:http://localhost

Status Result Details:

Basic authentication is not a secure authentication protocol. You should
consider using Secure Sockets Layer (SSL) for added security.Path:W3SVC
AuthType:Basic

must be domain memberPath:W3SVC
AuthType:Kerberos

Server's response:
Learn about IIS status codesPath:W3SVC/1/ROOT
AuthType:Anonymous

must be domain memberPath:W3SVC/1/ROOT
AuthType:Kerberos

Server's response:
Learn about IIS status codesPath:W3SVC/1/ROOT/localstart.asp
AuthType:Anonymous

must be domain memberPath:W3SVC/1/ROOT/localstart.asp
AuthType:Kerberos

Server's response:
Learn about IIS status codesPath:W3SVC/1/ROOT/iisadmin
AuthType:Anonymous

must be domain memberPath:W3SVC/1/ROOT/iisadmin
AuthType:Kerberos

Server's response:
Learn about IIS status codesPath:W3SVC/1/ROOT/tsweb
AuthType:Anonymous

must be domain memberPath:W3SVC/1/ROOT/tsweb
AuthType:Kerberos

Server's response:
Learn about IIS status codesPath:W3SVC/1/ROOT/CrystalReportWebFormViewer2
AuthType:Anonymous

must be domain memberPath:W3SVC/1/ROOT/CrystalReportWebFormViewer2
AuthType:Kerberos

Server's response:
Learn about IIS status codesPath:W3SVC/1/ROOT/images
AuthType:Anonymous

must be domain memberPath:W3SVC/1/ROOT/images
AuthType:Kerberos
Diagnostics complete

==== Authentication Results from "AuthDiag" ===== above: