How can everyone be so naïve about NTFS permissions? Just yesterday I had an Associate Director bring a web site to its knees by cut-and-pasting a configuration file from somewhere else on the system. Today's problem was far more obfuscated though, and we would have saved six hours of 3 devs' (and countless users') time if the same (recently promoted) Associate Director had looked in the event log as suggested to him. As it turns out, when the IUSR_MACHINENAME user account is locked out - and IIS is configured to only allow anonymous access - IIS will not serve any static content. If you allow Integrated Windows Authentication as well, then IIS will fall back to that mechanism (a corollary: if your service delivery guy is an administrator, everything will appear fine to him). In the first instance, a Filemon trace won't show failures of w3wp.exe trying to access the files, because it's the logon that's failing - and this can be very confusing! In the second instance, it will clearly display the NT username (of the token that w3wp.exe's associated with the current request) next to the file open failure.
So, next time you see the error: access denied, and you've ruled out the fact that a Muppet has messed up the permissions on a critical file... look in the Event Viewer and save yourself a bunch of time. It's there for a reason. Use it. Take a step further even, and write to it yourself!