So I have always had a problem occasionally with the "Access is Denied" error. Usually cleaning out the bin folder bouncing the development server and restarting Visual Studio would fix this. (I made a nice little batch script) I ran across a case where it wouldn't fix the problem.
After some searching I found out what is causing the problem. Its the Indexing service locking the temporary ASP.Net files.
Just go into your services console (Start->right click my computer->select manage-> click Services) and locate the Indexing service and switch the startup type to manual and stop the currently running service.
Microsoft ticket is
here