I got this error the other day and was stumped on what caused it.  It all started when the place i work decided to install webfiltering, most of the time this would not bother me and i would just go about my normal business. Not this time, so myself and another coworker thought that we would just bypassed the filter using an ssh tunnel to our boxes at home and with the use of a proxy run all web traffic over the ssh.  By the way this works great.  My solution after the break.


Back to the error: "The service could not bind instance 1"
after i did an iisreset i noticed that my default web site would not come back on line.  So after seeing the above error it got me thinking about what would cause this change.  After about 20 mins i remembered that i had been running PuTTy to create my ssh tunnel and that it was dealing with port 80 as well.  I shutdown PuTTy and bounced IIS, and this time the site came up as normal. 

The moral to the story:
if you are running something like a ssh proxy over port 80 or i have even noticed that some people have had issues with Skype using port 80.  I think that a lot of application that want to bypass the firewall will resort to trying to use port 80 because this port is almost never fully blocked for web traffic. Just double check what apps you have running and if you think that they might be using port 80 then shut them down and give 'ol IIS a bounce and it should clear it all up.