Having read this post a few hours ago, I carried on searching. I can't
believe more people haven't had this error.
I have a XP Pro server running IIS and msvsmon running (which incidentally
can see the debug requests coming in), but my XP Home machine hosting VS2005
then refuses giving the 'use the Local Security Settings' message (which
doesn't exist on XP Home).
However, Microsofts feedback is contradictory: Firstly, there is the
feedback to this very post which implies it's not possible.
This also implies you need XP Pro:
But this implies you can use XP Home (any edition):
I've just about given up and decided to install Pro on my Home machine. I'm
just so surprised there's so few people wanting to do this.