I'm using the MVC Code First approach to create a SQL Compact database (from WebConfig: data source=|DataDirectory|MailBoxDB.sdf). The .sdf file should get created automatically, and it does if I manually create the App_Data folder on the web server (Windows Server 2008). However, I'm trying to automate the deployment process and I want to eliminate this manual step. I'm using MSDeploy to create the deployment package. Is it a permissions issue that prevents IIS (7.5) from creating the App_Data folder on its own? If so, which settings should I be focusing on? Any ideas?
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I had a similar scenario (generally more complex, although without a database in App_Data). I pieced together several SO questions and found a solution which I've posted on my question on the same topic. Take a look at my answer and hopefully it helps.

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Emil Lerch
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