I successfully deployed MVC 4 to my local IIS 7.5 (windows 7). This fix my problem (as mentioned here)
(For x64 system)
%windir%\Microsoft.NET\Framework64\v4.0.30319\aspnet_regiis.exe -i
(or if you in 32-bit system)
%windir%\Microsoft.NET\Framework\v4.0.30319\aspnet_regiis.exe -i
Also, I changed the DefaultAppPool to use v4-Integrated (from v2-Classic), converted the website to application, and have the application to use DefaultAppPool.
Here is my complete Web.config. It has Handler included.
<?xml version="1.0" encoding="utf-8"?>
<compilation targetFramework="4.0" />
<pages>
<namespaces>
<add namespace="System.Web.Helpers" />
<add namespace="System.Web.Mvc" />
<add namespace="System.Web.Mvc.Ajax" />
<add namespace="System.Web.Mvc.Html" />
<add namespace="System.Web.Routing" />
<add namespace="System.Web.WebPages" />
</namespaces>
</pages>
<modules runAllManagedModulesForAllRequests="true" />
<handlers>
<remove name="ExtensionlessUrlHandler-ISAPI-4.0_32bit" />
<remove name="ExtensionlessUrlHandler-ISAPI-4.0_64bit" />
<remove name="ExtensionlessUrlHandler-Integrated-4.0" />
<add name="ExtensionlessUrlHandler-ISAPI-4.0_32bit" path="*." verb="GET,HEAD,POST,DEBUG,PUT,DELETE,PATCH,OPTIONS" modules="IsapiModule" scriptProcessor="%windir%\Microsoft.NET\Framework\v4.0.30319\aspnet_isapi.dll" preCondition="classicMode,runtimeVersionv4.0,bitness32" responseBufferLimit="0" />
<add name="ExtensionlessUrlHandler-ISAPI-4.0_64bit" path="*." verb="GET,HEAD,POST,DEBUG,PUT,DELETE,PATCH,OPTIONS" modules="IsapiModule" scriptProcessor="%windir%\Microsoft.NET\Framework64\v4.0.30319\aspnet_isapi.dll" preCondition="classicMode,runtimeVersionv4.0,bitness64" responseBufferLimit="0" />
<add name="ExtensionlessUrlHandler-Integrated-4.0" path="*." verb="GET,HEAD,POST,DEBUG,PUT,DELETE,PATCH,OPTIONS" type="System.Web.Handlers.TransferRequestHandler" preCondition="integratedMode,runtimeVersionv4.0" />
</handlers>