My new web server is Server 2008 & IIS7 and SQL 2008 and I’ve deployed a test version of an application that had a mysterious 503 Service Unavailable error; not the main app, but all pages within a specific folder and I couldn’t see why. None of the settings were different for that folder. A quick search hit Phil’s blog entry, which led me to Keith’s. It’s the second quote which kicked off an “Oh, I wonder if it’s that” moment:

I think that the main confusion here is around the purpose of http.sys reservations. Reservations are used to prevent squatting. For example, SQL doesn't want other apps, admin or otherwise, to listen on http://+:80/sql/, so they make a reservation with their creds. Reservations are not for preventing malware from listening on your machine. If you have malware on your machine it can just open a socket if it wants to receive data.

Suddenly it made sense. The folder giving the errors was called Reports and SQL Reporting Services is installed, which also has a Reports folder, with a reservation. Rename the folder and everything works. So if you’re experience unusual service errors, this might be one to check.