I run Server 2008 installations for clients and can I suggest that unless there is no other operations running on this server you don't change any user permissions. You don't say how this is running, commercial server, external hosted service, local usage behind a firewall etc.
If you change anything it should be the permissions on the folders, not the user. IIS works differently to Apache reagarding rewrites etc.
http://learn.iis.net/page.aspx/460/using-the-url-rewrite-module/ might help with the rewrite issue.
As far as permissions go for folders, I would suggest you try and reset your user permissions to their original state.
Check your web root folder, where that is and reset the permissions to allow access from your IIS Users. Check your database settinga as well. You don't say if you have uploaded the Mysql and if that runs OK. As far as I remember the difference between uploading and running are based on the permission set to the files and folders. The read and execute permissions will run the files, you will need write and modify to write (upload) to the folders/files. Check your users ftp access permisiions on the folders.
If this were my setup I would have created a wordpress group and user and controlled permissions from there. I do the same for FTP access, one group, one account in the group, one place to close off access in emergencies.
I know this is obvious, but for my own sake I must say:- if you have control over user and file permissions at high levels on an open server then you must ensure that security is set at the highest level.