The SharePoint stack (Windows SharePoint Services & SharePoint Portal Server) install HTTP handlers onto the server; what's happening here is WSS/SPS is attempting to locate a SharePoint web at that URL - which obviously doesn't exist.
Whether SharePoint handles the request can be managed within the SharePoint central administration website - look under the "Define managed paths" section, and add your application to the "Excluded" list.

An easier solution would be to run some form of virtual PC software (Virtual PC 2004, Virtual Server 2005 etc) and install SharePoint on a separate machine; this way you won't affect your normal development needs - for example creating other web projects.