It sems to me that you are using an older version of Kooboo. please download a latest version again from codeplex. The new updated release should have a better friendly message when "application not found".
Please do the following and report again if you still have problems.
1. Download a latest version again.
2. Make sure the site in IIS is runing under ASP.NET 2.0. Some machine will default map a site ASP.NET 1.1 when created.
3. Check * (wildcard) file extension in IIS is map to ASP.NET 2.0 ISAPI_Filter as described in the installation guide.
After above steps, if you still have any problem, please report back with the error message.
Guoqi @ Kooboo team