You likely don't have the right bits installed.
- do all assemblies exist under bin of your web app?
Microsoft.Web.Scripting.dll
Microsoft.Scripting.dll
IronPython.dll
IronPython.Modules.dll
- does web.config have the needed settings?
<pages compilationMode="Auto"
pageParserFilterType="Microsoft.Web.Scripting.UI.NoCompileCodePageParserFilter">
</pages>
<httpHandlers>
<add path="*.py" verb="*" type="System.Web.HttpForbiddenHandler" validate="true" />
</httpHandlers>
<httpModules>
<add name="DynamicLanguageHttpModule" type="Microsoft.Web.Scripting.DynamicLanguageHttpModule"/>
</httpModules>