This error shows up when the account used to run the virtual web server is not useable. This could be caused by an account that is locked or disabled or because you have reconfigured the out of process application account.

The format is the error is  '/LM/W3SVC/1/Root/X'.

Where X is either blank in the case of the main virtual web server or includes the path of a virtual directory.

This message includes the comment check the username and password which gives you a clue to the cause and resolution of the error.

If you have problems starting Out–of–Process Applications after changing account information this is due to the user account's username and password information not being synchronized after the change. You might receive Event Log errors telling you that your IWAM_computername account could not be logged on. If you encounter this problem, run the synciwam script to synchronize the passwords.

IIS 5.0 provides Synciwam.vbs to update the launching identity of all IIS COM+ application packages that run out-of-process. The Synciwam.vbs script can be found in the \Inetpub\AdminScripts folder and can be run using Cscript or Wscript.

NOTE: Using Synciwam.vbs will reset all out-of-process applications (medium and high isolation) to IWAM_machine.

If SynchIWAM fails with the "empty username or password" error, it may be necessary to update the IWAM_ account manually in the IIS Out-Of-Process Pooled Applications object and all Web sites in which the Application Protection is set to High (Isolated).

For IIS 4.0

Check the Identity properties of each Web site. These packages are located under the Microsoft Transaction Server folder in the IIS Microsoft Management Console (MMC).

1. In the IIS MMC, click to expand the Computers, My Computer, and Packages Installed nodes.
2. Right-click each IIS Web site (that is, IIS - < Web_site_name>), and then click Properties.
3. On the Identity tab, ensure that the IWAM_ account that is assigned to IIS Out-of-Process Pooled Applications appears in this window.
4. On the Home Directory tab, if the Run in separate memory space (isolated process) check box is selected for any Web site, an object for that Web site also exists under the name IIS-< Web_site_name//root>.
5. Repeat the preceding steps for each Web site that is running in separate memory space.

For IIS 5.0

Check the Identity properties of the IIS Out-of-Process Pooled Applications for Microsoft Transaction Server Properties and all Web sites that are set to High (Isolated) in the Application Protection list box on the Home Directory tab. These packages are located in the Adminstrative Tools/Component Services folder.

1. Under the Console root, click to expand the Component Services, Computers, My Computer, and COM+ Applications nodes.
2. Right-click the IIS Out-of-Process Pooled Applications object, and then click Properties.
3. On the Identity tab, ensure that the IWAM_ account that is assigned to IIS Out-of-Process Pooled Applications appears in this window.
4. Repeat the preceding steps for all Web sites that are set to High (Isolated) in the Application Protection list box (which are identifed as IIS-< Web_site_name//Root>).

You may find that using syniwam.vbs does not utility does not function and generates error 0x80110414
http://support.microsoft.com/default.aspx?scid=KB;EN-US;Q269367