ClickOnce Publishing is one of the best ways to distribute rich client applications based on the .NET framework. But there are some limitations in IIS 7 that cause it to break. Brian Noyes explains how to work around these limitations.
The problem is twofold. Not only does Visual Studio relies on FrontPage Server Extensions (FPE) in order publish ClickOnce applications, VS must be running as an administrator.
Brian Noyes goes into details on how to configure FrontPage Server Extensions for IIS 7 and change Visual Studio to always run as an administrator.
According to Brad Abrams, this issue will be fixed in the Orcas release.