How to fix HTTP Error 401.2 - Unauthorized IIS 7.5

I have Windows 7 Professional and IIS 7.5 installed on my machine.I configured .Net application to use IIS server.
When I compiled the application I am getting HTTP Error 401.2 - unauthorized
You are not authorized to view this page due to invalid authentication headers.

Detailed Error Information.               Logon Method Not yet determined
Module:IIS Web Core                       Logon User Not yet determined  
Notification:Authentication Request
Error Code 0x80070005

Most likely causes:
•No authentication protocol (including anonymous) is selected in IIS.
•Only integrated authentication is enabled, and a client browser was used that does not support integrated authentication.
•Integrated authentication is enabled and the request was sent through a proxy that changed the authentication headers before they reach the Web server.
•The Web server is not configured for anonymous access and a required authorization header was not received.
•The "configuration/system.webServer/authorization" configuration section may be explicitly denying the user access.

I opened the virtual directory from Internet Information Services(IIS) Manager.But I am not sure how to set up the properties.Recently Windows 7 installed on my machine.This is first time I am configuring the IIS 7.5.

Please let me know how to set up the Virtual directory properties and IIS properties and fix the error.

Thanks