The AppPool more or less defines which user group can access the site (probably an over simplified, newbie definition, but I only know enough about AppPools to be dangerous.) From what I understand, this is a new layer of 'security' where you can limit access to specific user groups.
When you are setting up a website, you have to specify an AppPool. The 'default AppPool' settings may be fine, but there are some considerations in case you have problems.
The AppPool selected or created for your website must use .NETFramework 4.0 (not 2.0).
The AppPool selected must have the Managed Pipeline Mode set to 'integrated' rather than 'classical'.
The AppPool selected must have the 'NetworkService' user set as the Identity setting (assuming that you gave NetworkService full permissions as described earlier).
For what it's worth, I created an AppPool named 'dnn AppPool' that has those settings and use it for my local DNN portals.
1. To view the available AppPools, click on the Application Pools folder.
2. To add a new AppPool, right click on the Application Pools folder, the click on Add Application Pool from the menu.
2. Enter a name for the new AppPool and select the 4.0 .NET Framework. Leave the Managed Pipeline Mode with the 'Integrated' default selection. Click OK.
You can view the full settings for an AppPool by right clicking on the entry, then selecting Advanced Settings. This is one way you can check to see if the AppPool you are using has the desired settings, and if not, you can change them.
If you want to check to see what the AppPool setting for your website is, right-click on the website folder --> Manage Web Site --> Advanced Settings. You can view the the AppPool associated with the website.