KeepAlive should normally be used to handle the requests that immediately follow an HTML request. Let's say on the first visit to your site I get an HTML page with 5 css, 5js and 25 images, I will use my HTTP connection which is still alive to request these things (well, depends on the browser, I'll maybe use 3 connection to speed up these things).
To handle this fact we usually use a Keepalive of 2s or 3s. Having a longer keepalive means the connection is waiting for the next page that the user may request. This may be a valid way of thinking, next time the user will want a page, we'll avoid to loose time establishing HTTP connection (and this can be the longest part of the request/response time). But for your server that mean most of HTTP connection that are handled by the server are doing... nothing. And you will reach your MaxConnection (W3SVC/MaxConnections with a ridiculous default to 10), with connections doing nothing. Really Bad. So long keep-alive needs big webservers and should be used only if your application really needs it.
If you use Keepalive in a 'classical website' you must change the connection timeout (by default 2min). In Apache you would have 2 settings, a keepalive tiemout (5s by default) and a connection timeout (2min). In IIS seems the timeout settings is used for both. So do not set it to 2s (a client really slow in sending his request will timeout), but something like 10s is maybe enough. Now one response is to disallow Keep-Alive, and make the browser opening more connections. Another response is to use a modern webserver (like nginx or cherokee for example) which handles keep-alive connection in a more elegant and resource-free way than Apache or IIS.
Even if you do not use Keepalive, what's the reason of waiting 2 minutes for a client timeout? it's is certainly too high, decrease this value to something like 60s.
Then you should check several settings related to timeout (ConnectionTimeout, HeaderWaitTimeout, MinFileBytesPerSec) and this nice response on performances settings in the registry.