Your error indicates that IIS7 was not completely installed and configured on your machine to run Aras Innovator. You simply need enable IIS certain features on your machine.
1) From the “Control Panel”, open “Programs and Features”
2) Select “Turn Windows features on or off”, located on the left hand side of the dialog.
3) When this menu populates itself you will want to select on the Internet Information Security and expand that in the TOC
4) Please adjust your feature as shown below:

a. Disable the FTP Publishing Service
b. Under Web Management
i. Make sure the IIS6 features are disabled
ii. Enable the IIS Management Console, IIS Management Scripts and Tools, and IIS Management Services.
c. Under World Wide Web Services you want to make sure everything is turned on.
i. Expand Application Development Features and common HTTP Features. Make sure that both have all the options fully selected.
d. Enable “Health and Diagnostics”, “Performance Features, and Security
5) Click on OK to accept the changes and will install these changes for you for IIS.