Http 500 internal server error on MVC3 deployment

I'm trying to deploy an MVC3 application to IIS 7.5 On every route I'm getting an http 500 - internal server error :

Error Summary
HTTP Error 500.0 - Internal Server Error
The page cannot be displayed because an internal server error has occurred. Detailed Error Information
Module ManagedPipelineHandler 
Notification ExecuteRequestHandler 
Handler System.Web.Mvc.MvcHandler 
Error Code 0x00000000 
Requested URL http://www.xxxxxx.com:80/Home/Index
Physical Path C:\inetpub\wwwroot\xxxxxx.com\Home\NoAccess 
Logon Method Anonymous 
Logon User Anonymous 
Failed Request Tracing Log Directory C:\inetpub ..

I am able to request simple html files, or regular aspx files with inline code. Failed request tracing was enabled and the request trace showed one warning :

131. -MODULE_SET_RESPONSE_ERROR_STATUS 
ModuleName ManagedPipelineHandler 
Notification 128 
HttpStatus 500 
HttpReason Internal Server Error 
HttpSubStatus 0 
ErrorCode 0 
ConfigExceptionInfo  
Notification EXECUTE_REQUEST_HANDLER 
ErrorCode The operation completed successfully. (0x0) 

When I try to recreate the site in IIS, and test connection I'm getting a "Cannot verify access to path" error. I gave full control to the Network Service and the application pool's identity is also Network Service.

Framework is set to 4.0, managed pipeline mode = integrated.

Any Ideas .. or is more info needed?

Have a look here first: https://stackoverflow.com/questions/5349867/error-handling-in-asp-net-mvc3

Update: if it doesn't help - read this discussion (especially the last post on page 2): http://forums.asp.net/t/1657582.aspx/2/10?Error+500+0+when+MVC+runs+on+IIS7

Update 2: This one looks very promissing too: http://forums.asp.net/t/1652026.aspx/1

remove <add verb="POST,GET" path="ajax/*.ashx" type="Ajax.PageHandlerFactory, Ajax" /> from httpHandlers

and add <add verb="POST,GET" name="scripthandlerajaxFactory" path="ajax/*.ashx" type="Ajax.PageHandlerFactory, Ajax" /> to handlers