Localhost asp login fails after installing Smartftp

I have a local application that runs on IIS 5. i login into it with something like http://localhost/ultra/login.asp
after installing SmartFTP 2 i cant connect to my database! i get the login page but after entering the login credentials i get the error

Now, i know it's smart ftp because i reproduced the same error on another machine. When Smart ftp is not installed the app works. after installation i get the error show below.
Has anyone had a similar problem and if so, whats the solution?
Server object, ASP 0178 (0x80070005)
The call to Server.CreateObject failed while checking permissions. Access is denied to this object.

Browser Type:
Mozilla/4.0 (compatible; MSIE 6.0; Windows NT 5.1; SV1; .NET CLR 1.1.4322)

POST 51 bytes to /ultra/startup.asp

POST Data:

Thursday, October 19, 2006, 4:46:58 PM

More information:
Microsoft Support

Hello ..

This error has nothing to do with SmartFTP.