This happens when you switch the iis to run 32 bit web application on 64 bit os environment without uninstalling 64 bit runtime from IIS. %1 is not a valid Win32 application.

You need to install / uninstall asp.net framework version of aspnet_isapi.dll from appropriate folder before and after swithcing.

to install/uninstall run aspnet_regIIS.exe found at appropriate framework version

You should not assign 64 bit version of aspnet_isapi.exe found at C:\WINDOWS\microsoft.net\Framework64\v2.0.50727\aspnet_isapi.dll  
to handle .aspx or .axd or .asmx or .ashx if iis is running in 32 bit mode.

To handle those request assign 32 bit version of aspnet_isapi.dll found at C:\WINDOWS\microsoft.net\Framework\v2.0.50727\aspnet_isapi.dll to appropriate extensions, when iis is runnig in 32 bit mode.

Referance image.