I have ServerSideIncludeModule enabled using "Turn on/off Windows Features" Control Panel. On inetmgr's Handlers-Mapping suite, I have mapped it to handle my .html extension.
However after everything has been done and I tried to browse my Default.html (which has
<!--#include virtual="includes/NavBand.html"-->
) it gave me the above 500.0 - Internal Server Error on this url
http://localhost/myDir/Default.html
!!
If I removed my mapping, my default page works again of course without the include htmls.
I have checked the Permission, the users have read and script rights.
However, the same implementations work fine on Windows Server 2008 IIS7.5 just not on my local workstation which has IIS installed on it.
Remarks: There is a file NavBand.html sitting inside the .\includes dir. So that is not the issue.