1) Make a website. I think you can use something as simple as a folder with Default.aspx (containing regular html). Maybe there are other file types. That will be tomorrow's challenge.
2) Add IUSR to its permissions with Properties->Security->edit->add->enter object name->full permissions. UPDATE: it's a week or so later. I just added a new local host to my computer. It wouldn't work until I also added IIS_IUSRS. Apparently both are needed. 3) Go to IIS7 manager (control panel->administrative tools->IIS), click the outline in the left column until you see Sites. Right-click->Properties->add website. Enter things like I showed in the screen shot of the first post. 4) Edit C:\\system32\drivers\etc\hosts with Notepad in admin mode. Add a line like "127.0.0.1 www.sandbox.local" and save. It turns out that this is effective immediately. 5) Try the site. 6) Scream Eureka and make a cocktail. Accomplishment has been achieved.