This is an old question but I got the error today and the following is what I found to fix it. I hope it helps others in the future.
I see solutions for modifying the security for the web.config file but not for the entire folder. See
HTTP Error 500.19" error when you open an IIS 7.0 Webpage. For error 0x80070005 Method 2 says to add IIS_IUSRS, for the
website directory (the folder containing the Web.config file). It also says to qualify with the computer name but that is probably not necessary for most of us. Perhaps qualifying with the computer name would have helped Member 11541921 in Solution 7.