Answer by zwitterion for Cannot read configuration file due to insufficient permissions

I had the same problem when I tried to share the site root folder with another user. Some folder lost the permission.So I followed the steps to add permission to IIS_IUSRS group as suggested by Afshin Gh.The problem is this group was not available for me. I am using windows 7.

What I did I just changed some steps:

1. Right click on the parent folder (who lost the permission),
2. Properties => Security =>In "Group or user names:",
3. Click Edit...
4. Window "Permission for your folder" will be opened.
5. In "Group or user names:" press ADD... btn,
6. Type Authen and press Check Names,
7. You will see the complete group name "Authenticated Users"
8. Press ok => apply.
9. This should enable privileges again.

That worked for me.