WebDAV Hell

Trying to setup SCCM 2007 R2 on WIndows 2008 R2 server#
I have installed WebDAV on IIS 7.5 and configured it as needed for SCCM to function

However the SMS_MP_CONTROL_MANAGER keeps throwing errors about WebDAV not being properly configured! (Error 4970) then that it failed to install (Error 1016)

Not sure what else I can do... :(

WebDAV Auth rule created for All Users / All Content / Read
the True / True / False values have also been set correctly...

Anyone got any other ideas why SCCM would think webDav wouldn't be working