Hi Tom,
Don't think this is to do with the application pool. Heres the sequence of events. I have 2 application pools - the default and one specifically for ASP2 sites.
I create the new web site which defaults to NET 1.1 and the default application pool - the folder the site is pointed to is empty.
Switch the application pool from the default to ASP2 pool hit apply - no problems - all sites are still viewable.
Go into ASP.NET tab and switch version from 1.1 to 2.0 hit apply - loss of service - all web sites are displaying "Service Unavailable" for a time.
Seems its not the application pool but the switching of the version which is causing the issue. This usually wouldn't be an issue but its a very busy web server and some customers are noticing the downtime especially with the sites which don't come back up after the service restarts.