Tim,
I am sorry if this is a silly question, but does your account have administrative privileges? Just because you can run an app, it doesn't mean you can automatically debug it. For example, you can run www.microsoft.com, but I don't think you would be able to debug it ![Smile [:)]](/emoticons/emotion-1.gif)
When you create a new web site, you are probably creating a "file system" web site, which, as you noticed and as Dennis explained, does not use IIS to run your web site (it uses a separate web server "Cassini" to run your application). Those webs can be debugged without administrative privileges. Your converted app is probably an IIS app. You need to be an admin to debug that.
You can try opening your app as a file system web, e.g., do File->Open Web Web Site, make sure "File System" is selected, browse to the root of your web site and open it. Most of the web apps should work like that. After that you should be able to debug it.
See if that works for you.
Thanks,
Alex
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