I'm working on a web site in Visual Web Developer Express 2008 and ran into a problem.  I received the following error when doing a "Rebuild Web Site":

"Failed to start monitoring changes to 'C:\inetpub\wwwroot\NACE\global.asax'."

After some trial and error, I traced the problem down to the following line in my web.config file:

<identity impersonate="true" userName="mydomain\myCRMuser" password="mypassword" />

When this line is commented out, I can build the site with no problems.  I need to use impersonation because, among other reasons, I need to query filtered views in a Microsoft CRM database.  Has some change been made to the way impersonation works in VS2008?
 

Just want to give this a bump and add that the user specified in the identity element is in my local IIS_USERS group and therefore appears to have all of the correct permissions to the application folder.