3. I created an extremely simple page (a page with a button on it), and when I tried to view it, I got "security permission" errors.
4. I went to C:\Documents and Settings\mendhak\My Documents\Visual Studio Projects and shared testing1 (like a network share) and when I refreshed the erroneous browser, it worked fine.
My question is: Is this sharing of folders necessary?
You don't have to share it with all. You just need to give the asp.net account access to that folder. This is just to make sure security is in place. If they didn't do this, that asp.net account could do anything on the machine....which isn't good if a hacker hacks your app and makes it do things it wasn't designed to do.
Lets make this a little more clear, you still have to web share the folder, otherwise it isn't going to work, but that should be taken care of when you map the folder as a virtual folder in IIS.
Since you are doing it in your Document and Settings, it would need to be shared I believe, so yes, you would have to share it because that folder is only for you on that computer unless you specifically set the permissions otherwise. Other users are not supposed to be able to get to your documents.
I recently installed the Microsoft .net example tutorials. I tried to make the tutorial public but I had similar problems to you.
In the end I created the virtual directory in IIS for QuickStart (or whatever alias you are using) and in Windows explorer I shared the folder for default IUSR_xxxxxx.
This should work for you.
But I still have a problem when I run some tutorials that arent security related, some trace messages appear -