In Visual Studio Orcas Beta 1, the AJAX ScriptModule is listed in the web.config template used for version 3.5 web projects.  There is a known bug (DevDivBugs 78367) that prevents Visual Studio F5 debugging from working on IIS7 / Windows Vista when a module in the IIS/ASP.NET integrated pipeline has an event handler for PreSendRequestHeaders or PreSendRequestContent.  Unfortunately, the ScriptModule listens to these.

There are two workarounds:

1. If you’re not using AJAX, you can remove the ScriptModule from the web.config file.  You need to remove it from the “<system.webServer><modules>” configuration section, since this is the one used by the IIS/ASP.NET integrated pipeline.  Note that 2.0 web projects uses a web.config template that does not contain an entry for ScriptModule, and can therefore be debugged using F5 without making any changes.
2. If you’re using AJAX, you can run the application in the “Classic .NET AppPool” instead of the “DefaultAppPool”.   

If you need to use the IIS/ASP.NET integrated pipeline and AJAX, you’re best option is to manually attach to w3wp.exe instead of using F5 debugging. 

This issue is fixed post Orcas Beta 1.