This came up recently internally and I thought I'd share it here in case other are running into it..
Because Vista (and Longhorn Server) run the new IIS7, there are a handful of tweaks you have to make to IIS and VS to make clickonce publishing work... Brian Noyes has a good blog on the details... But basically.
1. Configure VS to run in Admin mode:
2. Turn on IIS 6 compatibility as follows –
Control Panel | Programs | Turn Windows features on or off
You need the “IIS Metabase and IIS 6 configuration compatibility” feature turned on.
Oh, and yes, we are fixing both of these for Orcas RTM ;-)