Found the solution. The problem was that the IUSR and IWAM accounts passwords were not synchronized in IIS Metabase, Local Users and Groups and Component Services.
To fix it:
1. Download and install
IIS Metabase Explorer.
2. Run IIS Metabase Explorer. In the main list view, copy the data value for MD_WAM_PWD into notepad.
3. Go to Control Panel > Administrative Tools > Computer Management and expand the "Local Users and Grouups > Users" tree node.
4. Select the IUSR_<NAME> and IWAM_<NAME>, right click and choose "Set Password".
5. Copy the password obtained in step 2 as the password for both user.
6. Go to Control Panel > Administrative Tools > Services, and restart the IIS Admin.
That should do it.
Pete