I found that the best way to resolve it is to uninstall IIS and reinstall it. BE SURE TO RESTART YOUR MACHINE AFTER INSTALLAION.
After you do that just type [localhost...] in the URL and hopefully it should work.
One thing to watch for when your installing it is the make sure the checkbox for IIS is not gray. If it is then click on it and go to details for everything in IIS and click it. Gray means that you are not installing the full version.
Ok I have the solution for you if you havent already got it... this will work 100%, sounds weird but trust me.. Go into you control panel>>Internet options, then click on your "connection tab" then into Lan Settings. With in here unclick "Auto Detect settings" Voila. It will now work.. Bizzare, I know but it works! Good luck!