Yep, kinda sounded like a privilege issue. I remember how much of a pain it was configuring the 2003 machines with IIS, and I haven't looked back since :P
Take a look at this one: http://www.iis-aid.com/articles/trou...unable_to_fork
which indicates to modify the acl for the IIS user. I'm not sure if I like that approach, but I think it beats executing it as another user with more access.