Hi Claudio,
500 - Internal server error does not really tell us much. You should probably have access to site logs in the control panel, and we would appreciate if we could see a more detailed error description from the logs.
Additionally, MonoX generates its own log files in the /MonoX/ApplicationData/Logs folder. Could you please check if there are any non-empty files in that folder?

I have checked that folder and it only contains an empty file. Do I actually need to start a new new iis project locally if I am not hosting it locally? That makes no sense.

Ok now I get this

Error Summary
HTTP Error 500.19 - Internal Server Error

Config Error There is a duplicate 'system.web.extensions/scripting/scriptResourceHandler' section defined
Config File \\?\C:\REDCELL_Solutions\web.config
Requested URL http://localhost:80/
Physical Path
Logon Method Not yet determined
Logon User Not yet determined
Config Source

5: <sectionGroup name="scripting" type="System.Web.Configuration.ScriptingSectionGroup, System.Web.Extensions, Version=3.5.0.0, Culture=neutral, PublicKeyToken=31BF3856AD364E35">
6: <section name="scriptResourceHandler" type="System.Web.Configuration.ScriptingScriptResourceHandlerSection, System.Web.Extensions, Version=3.5.0.0, Culture=neutral, PublicKeyToken=31BF3856AD364E35" requirePermission="false" allowDefinition="MachineToApplication"/>
7: <sectionGroup name="webServices" type="System.Web.Configuration.ScriptingWebServicesSectionGroup, System.Web.Extensions, Version=3.5.0.0, Culture=neutral, PublicKeyToken=31BF3856AD364E35">

Under further investigation of the log file...

2010-10-07 03:49:49,896 [4] ERROR MonoX [MonoX] - Application Error
System.TypeInitializationException: The type initializer for '.' threw an exception. ---> System.TypeInitializationException: The type initializer for 'MonoSoftware.Web.WAO.HttpCompress.Configuration.HttpCompressConfiguration' threw an exception. ---> System.TypeInitializationException: The type initializer for 'MonoSoftware.Web.WAO.Base.BaseConfigurationSection' threw an exception. ---> System.Configuration.ConfigurationErrorsException: An error occurred loading a configuration file: Failed to map the path '/'. ---> System.InvalidOperationException: Failed to map the path '/'.
at System.Web.Configuration.ProcessHostConfigUtils.MapPathActual(String siteName, VirtualPath path)
at System.Web.Configuration.ProcessHostMapPath.MapPathCaching(String siteID, VirtualPath path)
at System.Web.Configuration.ProcessHostMapPath.GetPathConfigFilenameWorker(String siteID, VirtualPath path, String& directory, String& baseName)
at System.Web.Configuration.ProcessHostMapPath.System.Web.Configuration.IConfigMapPath.GetPathConfigFilename(String siteID, String path, String& directory, String& baseName)
at System.Web.Configuration.HostingPreferredMapPath.GetPathConfigFilename(String siteID, String path, String& directory, String& baseName)
at System.Web.Configuration.WebConfigurationHost.GetStreamName(String configPath)
at System.Configuration.Internal.DelegatingConfigHost.GetStreamName(String configPath)
at System.Configuration.BaseConfigurationRecord.InitConfigFromFile()
--- End of inner exception stack trace ---
at System.Configuration.ConfigurationSchemaErrors.ThrowIfErrors(Boolean ignoreLocal)
at System.Configuration.BaseConfigurationRecord.ThrowIfParseErrors(ConfigurationSchemaErrors schemaErrors)
at System.Configuration.Configuration..ctor(String locationSubPath, Type typeConfigHost, Object[] hostInitConfigurationParams)
at System.Configuration.Internal.InternalConfigConfigurationFactory.System.Configuration.Internal.IInternalConfigConfigurationFactory.Create(Type typeConfigHost, Object[] hostInitConfigurationParams)
at System.Web.Configuration.WebConfigurationHost.OpenConfiguration(WebLevel webLevel, ConfigurationFileMap fileMap, VirtualPath path, String site, String locationSubPath, String server, String userName, String password, IntPtr tokenHandle)
at System.Web.Configuration.WebConfigurationManager.OpenWebConfigurationImpl(WebLevel webLevel, ConfigurationFileMap fileMap, String path, String site, String locationSubPath, String server, String userName, String password, IntPtr userToken)
at System.Web.Configuration.WebConfigurationManager.OpenWebConfiguration(String path)
at MonoSoftware.Web.WAO.Base.BaseConfigurationSection..cctor()
--- End of inner exception stack trace ---
at MonoSoftware.Web.WAO.HttpCompress.Configuration.HttpCompressConfiguration..cctor()
--- End of inner exception stack trace ---
at MonoSoftware.Web.WAO.HttpCompress.Configuration.HttpCompressConfiguration.()
at .....cctor()
--- End of inner exception stack trace ---
at ..get_Instance()
at MonoSoftware.Web.WAO.HttpCompress.HttpCompressModule.?(Object sender, EventArgs e)
at System.Web.HttpApplication.SyncEventExecutionStep.System.Web.HttpApplication.IExecutionStep.Execute()
at System.Web.HttpApplication.ExecuteStep(IExecutionStep step, Boolean& completedSynchronously)

Are you running this on the IIS or ASP.NET Dev Server? Which OS and .NET framework are you using?
Some of our users reported similar problems with ASP.NET Dev Server and it turned out to be the permission issue.

So after deleting all the files and starting over I was able to get the installer running on my local machine. I then went into the web.config, set the install=false, and uploaded the whole thing to my godaddy /html/ folder. When I went to the wensite I got a 500 error. The tech guy helped me by uploading a different web.config file of his own and this is the error we received. He said it's a scripting error. How could it work locally and then have errors when it's on the remote server? Any help is appreciated.

Server Error in '/' Application.
Parser Error
Description: An error occurred during the parsing of a resource required to service this request. Please review the following specific parse error details and modify your source file appropriately.

Parser Error Message: The expression prefix 'Code' was not recognized. Please correct the prefix or register the prefix in the section of configuration.

Source Error:

Line 14: <asp:LoginView runat="server" ID="loginView">
Line 15: <AnonymousTemplate>
Line 16: <li><asp:HyperLink runat="server" ID="lnkRegister" Text="<% $Code:DefaultResources.Login_RegisterInvitation %>" NavigateUrl='<% $Code: MonoSoftware.MonoX.Utilities.LocalizationUtility.RewriteLink("/Membership/Register.aspx") %>'></asp:HyperLink></li>
Line 17: </AnonymousTemplate>
Line 18: </asp:LoginView>

Source File: /MonoX/MasterPages/PageFooter.ascx Line: 16

Version Information: Microsoft .NET Framework Version:4.0.30319; ASP.NET Version:4.0.30319.1

It appears that your GoDaddy technician removed too much stuff from the web.config. Could you please send it so we could see exactly what needs to be changed?

Seriously, I give up on GoDaddy. I have tried everything I can think of over the last week to no resolve. Can anyone suggest a better host? Lemme tell you where I am at:
I get it up and running on IIS. It even syncs with the empty remote database and begins the install. It creates the tables, then gives me the finger and tells me I have insufficient permissions to populate the tables. The tech support through godady is useless. Any suggestions would be great otherwise I am gonna have to monox and move onto something easier to install.

I'm prolly a big noob with these installers but I'm used to uploading the files to the host and going right to the installer. All these permissions issues are terrible and I've been dealing with it for 2 weeks now. I am NOT trying to host this website on my own server. Can anyone give me detail on how to install this on a remote host? or a better host to install it on?

As I explained in the e-mail sent earlier, we will start publishing our reviews of the hosting providers that do provide a decent service, along with instructions for installing MonoX on their servers.
It turns out that several large hosting companies actually do not care much about users that want to use anything more complex than a simple static HTML site. All installers for similar packages do require to elevate some permissions a bit (to create DB tables and write to specific folders).