IIS 7.5 truncating POST body containing JSON data with ASP.NET MVC 3

I'm facing a problem which I hope is a configuration thing with IIS but is right now giving a lot of trouble. Basically I have a controller that accepts a JSON and does some processing. While it generally works fine, but every now and then when the system has some load I get an error. After some painful debugging, we figured the incoming JSON gets truncated which causes the deserialzer to fail.

To narrow down the problem - we wrote a simple controller that accepts a JSON and tries to deserialize it. In case it fails it just logs it. This works fine but when I hit it using a load testing tool (JMeter) it throws the same error (truncation) for a few requests. The # of failures increased when I increase parallel connections. It starts showing with > 150 concurrent requests.

We are running IIS 7 on windows 2008 server with ASP.Net MVC 3 with more or less default configuration of IIS.

More information available in my question below https://stackoverflow.com/questions/12662282/content-length-of-http-request-body-size

The answer can be found on StackOverflow. It ended up being a bug with a hotfix.