I am very interested in the solution of this problem. I am running IIS7 with Server 2008 and I have different directories on one domain. for example coppermine and phpadmin works fine but if I install PHP code in another diroctory it comes with the 500 error.
I am searching for 2 weeks now and I think I will skip server 2008 for the coming time.
I installed 2 times the server, isntalled of course 2 times FastCGI, PHP, Mysql, but the error message and behaviour is still the same.
How funny, I just discovered what was wrong, If you receive error 500, it is generated by IIS7, but it is caused by PHP and you had to set in de php ini file display_errrors=On. You will see php errors and you had to repair your script. I happens by old scripts which were written in PHP4 and now I am running with PHP5