I got this error message on a server while installing Dynamics. At first I thought the problem was that my IIS is running 64 bit .NET 2.0 (I’ve had problems with that in the past), but it turns out that the actual problem is that .NET 4.0 was installed.
This guy figured out what the problem is: The installer checks for a specific filter in the IIS settings, which doesn’t exist when .NET 4.0 has been installed.
I’ll repeat the fix here, hopefully making this a bit more “discoverable” by search engines (searching the exact error message gave me nothing helpful, just tips about running aspnet_regiis.exe -i repeatedly):
In IIS Manager, right click Web Sites, and select Properties.
Under ISAPI Filters, Add a new filter you call ASP.NET_2.0.50727, pointing to C:\WINDOWS\Microsoft.NET\Framework64\v2.0.50727\aspnet_filter.dll (assuming 64 bit server, otherwise substitute Framework for Framework64).
Dynamics should now install without issue.