'A connection with the server could not be established'

hi,

i purchased this dell laptop recently. it has windows xp professional and the iis 5.1 is installed.
when i tried to create a asp.net web project or asp.net web service project, it pops up the error:
The web server reported the following error when attemping to create or open the web project located at the following URL: 'http://localhost/WebApplication1' 'A connection with the server could not be established'
after reading various posting on the news groups, i tried the following approaches:
1)turn off Mcfee virusscan and personal firewall
2)Go to Control Panel, Administrative tools, Internet information services, in the dialog box, right click default web site, all tasks, remove the server exensions, and reconfigured the server extensions
3)Go to Internet Explore, Tools, Internet options, take 'Connections' tab, click 'LAN Settings', check 'bypass proxy server for local addresses'

However, none of these fixed my problem. Does anyone has any clue what else i may try? since this is a new laptop, i am suspecting there is some basic setting i didn't do right.
any help is appreciated

Is the WWW service running? Check the Services applet in Administrative Tools.

Is the NET framework installed on your computer? You can get it from windows update.

Yes, the .net framework is installed.
what www services are you talking about?
i checked World WideWeb publishing services under Administrative tools->Services.

still the same error. any other clue? thanks.