This is being caused by one of the Windows updates that was installed on Tuesday. If you remove it for now, your websites will work.
Can be removed from Add/Remove programs etc.
I did some looking on the web after seeing this issue reported again, and others have also mentioned one of the updates breaks IIS. This link has further details, plus the updates that were included from Tuesday:
http://serverfault.com/questions/93049/why-does-december-8th-2009-patch-tuesday-kill-iis-in-windows-server-2003