I just migrated several sites to a new VPS, from 2003 to 2008R2. I wanted to take advantage of the built in url routing feature but when I disabled "Generate Folders" I would get the warning on the dashboard that my server does not support
After some digging I discovered that there is a hotfix,
KB980367 that corrects an issue in which handlers do not handle requests that do not end in a period. I dont know what that means, since i didnt think any of them ended in periods, but I gave it shot and it it fixed my issue. When Graffiti
checks ~/__utility/GraffitUrlRoutingCheck, the test passes and my site works properly.
I havent seen any mention of this problem so I wonder if I have a special case? The hotfix mentions all versions of IIS7.X so it shouldnt just affect 2008R2 users. I thought it may be some customizations in the theme but then the dashboard test wouldn't
fail. I just updated to the most current Beta 2 while troubleshooting. I've had other servers work just fine without this hotfix but they were brand new sites that never ran on anything but IIS7.5.
I figured at least I should share this in case someone else encouters the problem.