I have this error on a WinXP SP2 machine where I first installed Visual Studio 2005 and then Visual Web Developer: everything worked great for a while, but when I decided to remove VWD this problem appeared (not sure why).

Following your discussions I found that owssrv.dll (located in "C:\Program Files\Common Files\Microsoft Shared\web server extensions\50\isapi") is loaded by owstimer.exe, which is "SharePoint Timer Service"; I'm mot sure what it's meant do to, or what I have it on my laptop, I use it as a test machine and I can't tell exactely what (when) it's been installed.

I stopped "SharePoint Timer Service" and put it on manual startup, then renamed owssrv.dll to owssrv.dll.old (just in case I need to restore the previous configuration for some reasons) and now I'm able to create new HTTP based web applications on my localhost with Visual Studio 2005, and everything else seem to work fine...

Hope this helps, I'll update this post in case I'll find any issue with the above.

Cheers
Carlo

Thanks for this fix. I have this problem on several systems and hope MSFT corrects the bug. It has been affecting quite a few folks I know. I was beta testing VS2005 and assumed the problem would go away with the release, but it didn't.

Tom Skinner [C# MVP]

I had this problem;  I found the owssvr.dll in

C:\Program Files\Common Files\Microsoft Shared\web server extensions\50\isapi

 I renamed it to remove_owssvr.dll and the problem went away ....