Assembly Binding Error

I am trying to upgraded my web application from .Net 2.0 to .Net 3.5
While trying to execute the new upgraded application I get a assembly binding error Access Denied
what follows is fuslogvw.exe messages that describe this error
The operation failed.
Bind result: hr = 0x80070005. Access is denied.

Assembly manager loaded from:  c:\WINDOWS\Microsoft.NET\Framework\v2.0.50727\mscorwks.dll
Running under executable  C:\WINDOWS\Microsoft.NET\Framework\v2.0.50727\aspnet_wp.exe
--- A detailed error log follows.

=== Pre-bind state information ===
LOG: User = Unknown
LOG: DisplayName = JITCWebApps
 (Partial)
LOG: Appbase = file:///C:/Inetpub/wwwroot/JITCWebApps2008/
LOG: Initial PrivatePath = C:\Inetpub\wwwroot\JITCWebApps2008\bin
LOG: Dynamic Base = c:\WINDOWS\Microsoft.NET\Framework\v2.0.50727\Temporary ASP.NET Files\jitcwebapps\4b80b5fd
LOG: Cache Base = c:\WINDOWS\Microsoft.NET\Frame ...