HRESULT: 0x8007054F when setting Application Pool Identity to a custom account

Given any application pool on my local development machine, when I try to set the identity of it to a custom user (through the gui or otherwise), upon committing the changes I receive the error message:

An internal error occurred. (Exception from HRESULT: 0x8007054F)

And the change is not saved.

I've tried setting the identity to different users (including myself), with the same result.

Logging in as a different user to my box and going through the same steps does not solve the issue either.

Setting the identity to a built-in account works as expected.

I was able to resolve the issue by taking the following steps:

1. Uninstall IIS using the Turn windows features on or off dialog. (I'm uncertain if this is was necessary, but it seemed like a reasonable step. It is important to note I was unable to reinstall IIS at this point.)

2. Physically delete the following files from the MachineKeys directory on my PC (%ProgramData%\Microsoft\Crypto\RSA\MachineKeys on my Win7 installation):

   • 6de9cb26d2b98c01ec4e9e8b34824aa2_*
   • d6d986f09a1ee04e24c949879fdb506c_*
   • 76944fb33636aeddb9590521c2e8815a_*

Corresponding to iisConfigurationKey, NetFrameworkConfigurationKey, and iisWasKey respectively.

3. Install IIS through the turn windows features dialog.

Solution was found here: https://forums.iis.net/p/1148509/1865753.aspx