XP or Win2k3? You shouldn't need to add a Sip Peer in order to use VRDW, though it should be harmless to do so. Is this a new error, or have you always got it? Have you received any warnings regarding ASP.Net 2.0 vs. 1.1? Check that the IIS virtual directory for your application is configured for v2.0. Also, try killing aspnet_wp / w3wp.