I am now in the process of transferring my servers to windows azure. I created a virtual machine (2008 R2) and installed IIS 7.5. I then transferred one of the site (DNN) and configured it to with it's own apppool (4.0) and granted permission for this app pool to read and write.
I have two domains: one internal, which I defined in the HOST file, and one public (mydomain.com). The internal domain works fine however with the external domain I'm getting:
500 - Internal server error. There is a problem with the resource you are looking for, and it cannot be displayed.