ASP .Net Problem

Hi, I'm trying to create a ASP .Net project but it get stuck on the following error -

'Unable to create Web project 'WebApplication1'. The file path 'G:\aspx\WebApplication1' does not correspond to the URL 'http://localhost/WebApplication1'. The two need to map to the same server location. HTTP Error 404: Not Found'

If I try using Front page method I get-

'Unable to create Web project 'WebApplication1'. Moved Temporarily'

The Paths are correct, I'm running (all on local machine)-
Windows 2k Adv Server (SP2)
IIS 5
Microsoft Visual Studio .NET Architech edition
Visual Studio 6

I've also got interdev, it seems to work ok

Thanks in Advance

Make sure that ISS is running, if its not, then go to administrative tools and start it up.

ISS? Do you mean Internet Information Service? If so then it is running and I would get a different error when its not running.