We have a conundrum, and I am at my wits end with this issue. It is the same issue as this IIS_IUSRS and IUSR permissions in IIS8 thread... except the fixes don't work. The only thing that I believe is different is that we are running IIS 8.5 and the other post is running IIS 8.0.
I have it working with a service account from AD, but I would rather use the built in virtual account as I understand it is more secure this way.
Checking effective access on the IIS Apppool\Mydomain it has the correct access. For some reason it seems that it is just not adding the permissions as Effective Access
Clicking on Application Pools and then the domain then advanced we have ApplicationPoolIdentity under the identity
ACL on the directory for MachineName\IUSRS has read only ACL for IUSRS
ACL on directory for IIS Apppool\ApplicationPoolName ACL for ApplicationPoolName
Anything that could help is welcome. Thank you for your assistance.