Most likely you don't have Administrator rights. Start VFP with 'Run As Admin' and it should work...
Note if you have User Access Control on on your machine you're not a 'real' administrator, hence you still need to Run As Admin. When you run Setup this doesn't happen because Windows automatically elevates rights for programs that contain Setup/Install and a few ohter things in the EXE file name.
+++ Rick ---
DO Console WITH "Virtual", "MyTest","c:\westwind\MyTest",.F.,"IIS7","IIS://localhost/W3SVC/1/ROOT"
It may or may not be related, but in Step 1 of the New Project Wizard I have two options for IIS 7/8, one is .NET Handler, the other is ISAPI. I don't find any reference to these options in the documentation, which should I use?
Update: Running as administrator fixed the error. However, I still wonder whether I should use the IIS 7/8 .NET Handler or the IIS 7/8 ISAPI option in Step 1 of the New Project dialog.