OK, I persisted and found out that if I switched to classic pool, I then got a meaningful .net permissions error.
Just to review, I have all the websites on this server in a folder outside of InetPub. When I set up a new website, I grant anonymous access to the folder and assign the usual bindings. When I check permissions on that folder, the only permissions I see are:
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creator owner
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system
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administrators
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users
I compared that to wwwroot, and saw that Network service was assigned full control to InetPub, so I gave Network Service "modify" permissions on the new directory (actually one "new directory/App_Data"), and now it works.
If, however, I switch back to the App Pool created when I set up the website, I'm back to 500 errors. Can someone explain to me what's going on here? Is it a problem with application, or webconfig, or something else? I don't understand why which pool I use makes a difference?