Sorry for the repetition. Just found some typos in my last post which are fixed here:

These are instructions of how to install nopCommerce v1.9 on machine running  Windows7 and using SQL Express 2008 ( locally installed SQL server). I assume you have .NET4 installed with VS2010 and IIS enabled in windows.
1)  Download version 1.9 from nopCommerce server.
2)  Unzip and copy the content in c:/inetpub/wwwroot/’your-directory’ (you need to create this folder manually).
3)  Go in IIS and open the default web sites- ‘your-directory’ must be listed under the default sites.
4)  Right click on it ->Security->Select IIS_IUSERS(‘your_pc’\IIS_IUSRS)->edit the permissions and give full permissions ( tick all options)->OK .
5)  Restart IIS
6)  In IIS, Open the Application Pools. Right click on the Pool which is running  the applications (the number of applications running under the pool is stated on each row next to the pool’s  name on the right side) and change the pool to run under .NET4 (in my case was .NET2 – default value). WRITE somewhere the name of the pool. It will become handy latter.
7)  Restart IIS and exit.
8)  OK now you need a database. But to allow the database to be accessible from the pool’s thread you need the name of the pool.
9)  Open SQL Server Management Studio->  When you open( there will be a small menu screen) memorise the name of the server and make sure you access it using Windows Authentication method.
10)  Right Click on databases and create new database. ‘my_db’ for example.
11)  Now in the Explorer Windows in SQL Management Studio  you will see the following structure :Databases ,Security, Server Objects, Replication, Management. Open Security and create Login with name : IIS APPPOOL\’your-pool’. Notice!, below the ’Default DB’ parameter is ‘master’. This is the Security Menu under the ‘databases’ not under ‘your-db’.
12)  Create also Login: NT AUTHORITY\SYSTEM if it is not already listed
13)  Now go on Security menu under ‘your-db’ and add User name: NT AUTHORITY and select Login name IIS APPPOOL\’your-pool’. It must be listed in the drop down menu if you completed correctly 11).
14)  Select ‘db_owner’ for role membership menu.->OK
15)  With all this you are ready to start nopCommerce. Go to http://localhost/’your-directory’ and you must see the installation screen.(Actually you can use VisualStudio to browse and open the file install/ install.aspx)
16)  Step 1) if you have message that your APPPool can not access the directory of your web site -  check 4). You will not be able to install nopCommerce since the APPPOOL will not be able to do any changes in ‘your-directory’. Attention! The installation menu will allow you to go further and will say it is not an ERROR. Well, you can go to step 2 but this will be dead end since the Apppool will not be able to write the settings in ‘your-directory’
17)  In the database menu in stop 2 you have to select: ‘.\your-database’ (.\SQLEXPRESS was in my case)
18)  Connection method ‘Windows Authentication’ because it is on your local machine
19)  Database -> select ‘use empty database’ and type ‘your-db’ in the field
20)  This should allow you to complete the installation menu with no problems. If you have database error you have to check again that your APPPool is accessing your database. (Check the security settings of user : NT AUTHORITY in your db settings).
21)  Enjoy.