The network service account was not listed in the GroupExpansion virtual directory, so I added it with Modify permissions. Did a iisreset and still no luck on the validation test.
I noticed 2 ASP.NET 2 errors in the application log: "Unable to start monitoring changes to 'c:\inetpub\wwwroot\web.config' because access is denied. Application virtual path '/Abs/Int/Handler' "
There is no web.config in the root web directory and I never setup an asp.net web app in the root of this server.
Any advice?