I just had the same issue with me today. And I found it annoying. Though I have other two websites already under development from the same IIS but still was not able to create new site. Strange, but I did this.
You do not need to turn off/re-install anything other than what I have stated since it works.
Let me know if anybody had the same issue just like me and solved the same way. I think it was not the issue but a wrong way of creating website on localhost which Visual Studio rejects to open.
I hope this will help newbies.