A friend of mine was learning SharePoint Admin, and following an exercise in his book when he got this message.
The scenario was that he was created an Public Internet site. He just followed the directions in the book. One of the steps was to create a new Web Application. When he clicked OK, he got this error.

The problem was that he was told, in the book, to use the existing application pool. When he chose a new application pool and clicked ok (with all the other, same settings in the book exercise), it worked just fine.