Earlier this year, I published a blog post detailing how to make this work on Windows Vista.

Installing Vserver on IIS is not that different.  Firstly, IIS must be configured and in server 2008 the Web Server role needs to be installed.  Then, the following needs to be added:

Under Web Management Tools enable:

• IIS Management Console

Under IIS 6 Management Compatibility enable:

• IIS Metabase and IIS6 configuration compatibility

Under Application Development Features enable:

• CGI

Under Common Http Features enable:

• Default Document
• Directory Browsing
• HTTP Errors
• Static Content

Under Health and Diagnostics enable:

• HTTP Logging
• Request Monitor

Under Performance Features enable:

• Static Content Compression

Under Security enable:

• Windows Authentication

In IIS, you should also configure VSWebApp.exe under default documents.  You can also change the default port if you choose.  Since I am using my setup in a lab environment, I used port 80.

From here, as long as you run IE as Administrator and authenticate to the website as administrator, everything should work fine.

Read the complete post at http://owsug.ca/blogs/brad/archive/2008/11/09/Installing-Virtual-Server-2005-R2-on-Windows-Server-2008.aspx