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Thanks for the comment on my site gman
. Yep, I use Windows 2003 Enterprise Server using IIS 6, PHP 4.3.3 and MySQL 4.017-nt. The IWAN_MACHINENAME account is used for out of process functions, so won't be needed here. By IIS permissions I meant the settings from under the home directory tab of your website properties, however I'm 99.99% they would be right if you have gotten as far as you have. The most likely reason I can think of for getting the error you are is if the path to your system module folder is different from what XOOPS is expecting. Under your XOOPS root you should have something like;
\modules\system\
and under system there should be 5 directories called admin, blocks, images, language and templates. There also should also be about half a dozen other files.