Index: wp-includes/vars.php
===================================================================
--- wp-includes/vars.php	(revision 11340)
+++ wp-includes/vars.php	(working copy)
@@ -73,4 +73,11 @@
  */
 $is_IIS = (strpos($_SERVER['SERVER_SOFTWARE'], 'Microsoft-IIS') !== false) ? true : false;
 
+/**
+ * Whether the server software is IIS 7.X
+ * @global bool $is_IIS7
+ */
+$is_iis7 = ($is_IIS && strpos($_SERVER['SERVER_SOFTWARE'], 'Microsoft-IIS/7.') !== false) ? true : false;
+
+
 ?>
\ No newline at end of file
Index: wp-includes/rewrite.php
===================================================================
--- wp-includes/rewrite.php	(revision 11340)
+++ wp-includes/rewrite.php	(working copy)
@@ -1695,6 +1695,36 @@
 
 		return $rules;
 	}
+	
+	/**
+	 * Retrieve IIS7 URL Rewrite formatted rewrite rules to write to web.config file.
+	 *
+	 * Does not actually write to the web.config file, but creates the rules for
+	 * the process that will.
+	 *
+	 * @since 2.8.0 
+	 * @access public
+	 *
+	 * @return string
+	 */
+	function iis7_url_rewrite_rules(){
+		
+		if ( ! $this->using_permalinks()) {
+			return '';
+		}
+		$rules  = "<rule name=\"wordpress\" patternSyntax=\"Wildcard\">\n";
+		$rules .= "	<match url=\"*\" />\n";
+		$rules .= "	<conditions>\n";
+		$rules .= "		<add input=\"{REQUEST_FILENAME}\" matchType=\"IsFile\" negate=\"true\" />\n";
+		$rules .= "		<add input=\"{REQUEST_FILENAME}\" matchType=\"IsDirectory\" negate=\"true\" />\n";
+		$rules .= "	</conditions>\n";
+		$rules .= "	<action type=\"Rewrite\" url=\"index.php\" />\n";
+		$rules .= "</rule>";
+				
+		$rules = apply_filters('iis7_url_rewrite_rules', $rules);
+		
+		return $rules;
+	}
 
 	/**
 	 * Add a straight rewrite rule.
@@ -1790,6 +1820,8 @@
 		$this->wp_rewrite_rules();
 		if ( function_exists('save_mod_rewrite_rules') )
 			save_mod_rewrite_rules();
+		if ( function_exists('iis7_save_url_rewrite_rules') )
+			iis7_save_url_rewrite_rules();
 	}
 
 	/**
Index: wp-admin/includes/misc.php
===================================================================
--- wp-admin/includes/misc.php	(revision 11340)
+++ wp-admin/includes/misc.php	(working copy)
@@ -136,6 +136,34 @@
 }
 
 /**
+ * Updates the IIS web.config file with the current rules if it is writable.
+ * If the permalinks do not require rewrite rules then the rules are deleted from the web.config file.
+ * 
+ * @since 2.8.0
+ * 
+ * @return bool True if web.config was updated successfully
+ */
+function iis7_save_url_rewrite_rules(){
+	global $wp_rewrite;
+	
+	$home_path = get_home_path();
+	$web_config_file = $home_path . 'web.config';
+
+	// Using win_is_writable() instead of is_writable() because of a bug in Windows PHP	
+	if ( ( ! file_exists($web_config_file) && win_is_writable($home_path) && $wp_rewrite->using_mod_rewrite_permalinks() ) || win_is_writable($web_config_file) ) {
+		if ( iis7_supports_permalinks() ) {
+			$rule = $wp_rewrite->iis7_url_rewrite_rules();
+			if ( ! empty($rule) ) {
+				return iis7_add_rewrite_rule($web_config_file, $rule);
+			} else {
+				return iis7_delete_rewrite_rule($web_config_file);
+			}
+		}
+	}
+	return false;
+}
+
+/**
  * {@internal Missing Short Description}}
  *
  * @since unknown
@@ -370,4 +398,215 @@
 	 	exit;
 	}
 }
-?>
\ No newline at end of file
+
+/**
+ * Check if IIS 7 supports pretty permalinks
+ * 
+ * @since 2.8.0
+ * 
+ * @return bool
+ */
+function iis7_supports_permalinks() {
+	global $is_iis7;
+
+	$supports_permalinks = false;	
+	if ( $is_iis7 ) {
+		/* First we check if the DOMDocument class exists. If it does not exist,
+		 * which is the case for PHP 4.X, then we cannot easily update the xml configuration file,
+		 * hence we just bail out and tell user that pretty permalinks cannot be used.
+		 * This is not a big issue because PHP 4.X is going to be depricated and for IIS it
+		 * is recommended to use PHP 5.X NTS.
+		 * Next we check if the URL Rewrite Module 1.1 is loaded and enabled for the web site. When
+		 * URL Rewrite 1.1 is loaded it always sets a server variable called 'IIS_UrlRewriteModule'.
+		 * Lastly we make sure that PHP is running via FastCGI. This is important because if it runs 
+		 * via ISAPI then pretty permalinks will not work.
+		 */
+		$supports_permalinks = class_exists('DOMDocument') && isset($_SERVER['IIS_UrlRewriteModule']) && ( php_sapi_name() == 'cgi-fcgi' );
+	}
+		
+	return apply_filters('iis7_supports_permalinks', $supports_permalinks);
+}
+
+/**
+ * Check if rewrite rule for WordPress already exists in the IIS 7 configuration file
+ * 
+ * @since 2.8.0
+ * 
+ * @return bool
+ * @param string $filename The file path to the configuration file
+ */
+function iis7_rewrite_rule_exists($filename) {	
+	if ( ! file_exists($filename) )
+		return false;	
+	if ( ! class_exists('DOMDocument') )
+		return false;
+	
+	$doc = new DOMDocument();
+	if ( $doc->load($filename) === false )
+		return false;
+	$xpath = new DOMXPath($doc);
+	$rules = $xpath->query('/configuration/system.webServer/rewrite/rules/rule[@name=\'wordpress\']');
+	if ( $rules->length == 0 )
+		return false;
+	else
+		return true;	
+}
+
+/**
+ * Delete WordPress rewrite rule from web.config file if it exists there
+ *
+ * @since 2.8.0 
+ *
+ * @param string $filename Name of the configuration file
+ * @return bool
+ */
+function iis7_delete_rewrite_rule($filename) {	
+	// If configuration file does not exist then rules also do not exist so there is nothing to delete
+	if ( ! file_exists($filename) )
+		return true;
+	
+	if ( ! class_exists('DOMDocument') )
+		return false;
+	
+	$doc = new DOMDocument();
+	$doc->preserveWhiteSpace = false;
+
+	if ( $doc -> load($filename) === false )
+		return false;
+	$xpath = new DOMXPath($doc);
+	$rules = $xpath->query('/configuration/system.webServer/rewrite/rules/rule[@name=\'wordpress\']');
+	if ( $rules->length > 0 ) {
+		$child = $rules->item(0);
+		$parent = $child->parentNode;
+		$parent->removeChild($child);
+		$doc->formatOutput = true;
+		saveDomDocument($doc, $filename);
+	}
+	return true;
+}
+
+/**
+ * Add WordPress rewrite rule to the IIS 7 configuration file.
+ * 
+ * @since 2.8.0
+ * 
+ * @param string $filename The file path to the configuration file
+ * @param string $rewrite_rule The XML fragment with URL Rewrite rule
+ * @return bool
+ */
+function iis7_add_rewrite_rule($filename, $rewrite_rule) {	
+	if ( ! class_exists('DOMDocument') )
+		return false;
+	
+	// If configuration file does not exist then we create one.
+	if ( ! file_exists($filename) ) {
+		$fp = fopen( $filename, 'w');
+		fwrite($fp, '<configuration/>');
+		fclose($fp);
+	}
+	
+	$doc = new DOMDocument();
+	$doc->preserveWhiteSpace = false;
+
+	if ( $doc->load($filename) === false )
+		return false;
+	
+	$xpath = new DOMXPath($doc);
+
+	// First check if the rule already exists as in that case there is no need to re-add it
+	$wordpress_rules = $xpath->query('/configuration/system.webServer/rewrite/rules/rule[@name=\'wordpress\']');
+	if ( $wordpress_rules->length > 0 )
+		return true;
+
+	// Check the XPath to the rewrite rule and create XML nodes if they do not exist
+	$xmlnodes = $xpath->query('/configuration/system.webServer/rewrite/rules');
+	if ( $xmlnodes->length > 0 ) {
+		$rules_node = $xmlnodes->item(0);
+	} else {
+		$rules_node = $doc->createElement('rules');
+		
+		$xmlnodes = $xpath->query('/configuration/system.webServer/rewrite');
+		if ( $xmlnodes->length > 0 ) {
+			$rewrite_node = $xmlnodes->item(0);
+			$rewrite_node->appendChild($rules_node);
+		} else {
+			$rewrite_node = $doc->createElement('rewrite');
+			$rewrite_node->appendChild($rules_node);
+
+			$xmlnodes = $xpath->query('/configuration/system.webServer');
+			if ( $xmlnodes->length > 0 ) {
+				$system_webServer_node = $xmlnodes->item(0);
+				$system_webServer_node->appendChild($rewrite_node);
+			} else {
+				$system_webServer_node = $doc->createElement('system.webServer');
+				$system_webServer_node->appendChild($rewrite_node);
+		
+				$xmlnodes = $xpath->query('/configuration');
+				if ( $xmlnodes->length > 0 ) {
+					$config_node = $xmlnodes->item(0);
+					$config_node->appendChild($system_webServer_node);
+				} else {
+					$config_node = $doc->createElement('configuration');
+					$doc->appendChild($config_node);
+					$config_node->appendChild($system_webServer_node);
+				}
+			}
+		}
+	}
+	
+	$rule_fragment = $doc->createDocumentFragment();
+	$rule_fragment->appendXML($rewrite_rule);
+	$rules_node->appendChild($rule_fragment);
+
+	$doc->formatOutput = true;	
+	saveDomDocument($doc, $filename);
+
+	return true;	
+}
+
+/**
+ * Saves the XML document into a file
+ * 
+ * @since 2.8.0
+ *
+ * @param DOMDocument $doc
+ * @param string $filename
+ */
+function saveDomDocument($doc, $filename) {
+	$config = $doc->saveXML();
+	$config = preg_replace("/([^\r])\n/", "$1\r\n", $config);
+	$fp = fopen($filename, 'w');
+	fwrite($fp, $config);
+	fclose($fp);
+}
+
+/**
+ * Workaround for Windows bug in is_writable() function
+ *
+ * @since 2.8.0
+ *
+ * @param object $path
+ * @return bool
+ */
+function win_is_writable($path) {
+	/* will work in despite of Windows ACLs bug
+	 * NOTE: use a trailing slash for folders!!!
+	 * see http://bugs.php.net/bug.php?id=27609
+	 * see http://bugs.php.net/bug.php?id=30931
+	 */
+
+    if ( $path{strlen($path)-1} == '/' ) // recursively return a temporary file path
+        return win_is_writable($path . uniqid(mt_rand()) . '.tmp');
+    else if ( is_dir($path) )
+        return win_is_writable($path . '/' . uniqid(mt_rand()) . '.tmp');
+    // check tmp file for read/write capabilities
+    $rm = file_exists($path);
+    $f = @fopen($path, 'a');
+    if ($f===false)
+        return false;
+    fclose($f);
+    if ( ! $rm )
+        unlink($path);
+    return true;
+}
+?>
Index: wp-admin/options-permalink.php
===================================================================
--- wp-admin/options-permalink.php	(revision 11340)
+++ wp-admin/options-permalink.php	(working copy)
@@ -70,6 +70,7 @@
 include('admin-header.php');
 
 $home_path = get_home_path();
+$iis7_permalinks = iis7_supports_permalinks();
 
 if ( isset($_POST['permalink_structure']) || isset($_POST['category_base']) ) {
 	check_admin_referer('update-permalink');
@@ -100,12 +101,19 @@
 $category_base = get_option('category_base');
 $tag_base = get_option( 'tag_base' );
 
-if ( (!file_exists($home_path.'.htaccess') && is_writable($home_path)) || is_writable($home_path.'.htaccess') )
-	$writable = true;
-else
-	$writable = false;
+if ( $iis7_permalinks ) {
+	if ( ( ! file_exists($home_path . 'web.config') && win_is_writable($home_path) ) || win_is_writable($home_path . 'web.config') )
+		$writable = true;
+	else
+		$writable = false;
+} else {
+	if ( ( ! file_exists($home_path . '.htaccess') && is_writable($home_path) ) || is_writable($home_path . '.htaccess') )
+		$writable = true;
+	else
+		$writable = false;
+}
 
-if ($wp_rewrite->using_index_permalinks())
+if ( $wp_rewrite->using_index_permalinks() )
 	$usingpi = true;
 else
 	$usingpi = false;
@@ -115,11 +123,21 @@
 
 <?php if (isset($_POST['submit'])) : ?>
 <div id="message" class="updated fade"><p><?php
-if ( $permalink_structure && !$usingpi && !$writable )
-	_e('You should update your .htaccess now.');
-else
-	_e('Permalink structure updated.');
-?></p></div>
+if ( $iis7_permalinks ) {
+	if ( $permalink_structure && ! $usingpi && ! $writable )
+		_e('You should update your web.config now');
+	else if ( $permalink_structure && ! $usingpi && $writable)
+		_e('Permalink structure updated. Remove write access on web.config file now!');
+	else
+		_e('Permalink structure updated');
+} else {
+	if ( $permalink_structure && ! $usingpi && ! $writable )
+		_e('You should update your .htaccess now.');
+	else
+		_e('Permalink structure updated.');
+}
+?>
+</p></div>
 <?php endif; ?>
 
 <div class="wrap">
@@ -134,7 +152,7 @@
 <?php
 $prefix = '';
 
-if ( ! got_mod_rewrite() )
+if ( ! got_mod_rewrite() && ! $iis7_permalinks )
 	$prefix = '/index.php';
 
 $structures = array(
@@ -179,7 +197,7 @@
 </table>
 
 <h3><?php _e('Optional'); ?></h3>
-<?php if ($is_apache) : ?>
+<?php if ( $is_apache || $iis7_permalinks ) : ?>
 	<p><?php _e('If you like, you may enter custom structures for your category and tag <abbr title="Universal Resource Locator">URL</abbr>s here. For example, using <kbd>topics</kbd> as your category base would make your category links like <code>http://example.org/topics/uncategorized/</code>. If you leave these blank the defaults will be used.') ?></p>
 <?php else : ?>
 	<p><?php _e('If you like, you may enter custom structures for your category and tag <abbr title="Universal Resource Locator">URL</abbr>s here. For example, using <code>topics</code> as your category base would make your category links like <code>http://example.org/index.php/topics/uncategorized/</code>. If you leave these blank the defaults will be used.') ?></p>
@@ -203,12 +221,23 @@
 	<input type="submit" name="submit" class="button-primary" value="<?php esc_attr_e('Save Changes') ?>" />
 </p>
   </form>
-<?php if ( $permalink_structure && !$usingpi && !$writable ) : ?>
-  <p><?php _e('If your <code>.htaccess</code> file were <a href="http://codex.wordpress.org/Changing_File_Permissions">writable</a>, we could do this automatically, but it isn&#8217;t so these are the mod_rewrite rules you should have in your <code>.htaccess</code> file. Click in the field and press <kbd>CTRL + a</kbd> to select all.') ?></p>
+<?php if ($iis7_permalinks) :
+	if ( isset($_POST['submit']) && $permalink_structure && ! $usingpi && ! $writable ) : ?>
+<p><?php _e('If your <code>web.config</code> file were <a href="http://codex.wordpress.org/Changing_File_Permissions">writable</a>, we could do this automatically, but it isn&#8217;t so this is the url rewrite rule you should have in your <code>web.config</code> file. Click in the field and press <kbd>CTRL + a</kbd> to select all. Then insert this rule inside of the <code>/&lt;configuration&gt;/&lt;system.webServer&gt;/&lt;rewrite&gt;/&lt;rules&gt;</code> element in <code>web.config</code> file.') ?></p>
 <form action="options-permalink.php" method="post">
 <?php wp_nonce_field('update-permalink') ?>
+	<p><textarea rows="10" class="large-text readonly" name="rules" id="rules" readonly="readonly"><?php echo wp_specialchars($wp_rewrite->iis7_url_rewrite_rules()); ?></textarea></p>
+</form>
+<p><?php _e('If you temporarily make your <code>web.config</code> file writable for us to generate rewrite rules automatically, do not forget to revert the permissions after rule has been saved.')  ?></p>  
+	<?php endif; ?>
+<?php else : 
+	if ( $permalink_structure && ! $usingpi && ! $writable ) : ?>
+<p><?php _e('If your <code>.htaccess</code> file were <a href="http://codex.wordpress.org/Changing_File_Permissions">writable</a>, we could do this automatically, but it isn&#8217;t so these are the mod_rewrite rules you should have in your <code>.htaccess</code> file. Click in the field and press <kbd>CTRL + a</kbd> to select all.') ?></p>
+<form action="options-permalink.php" method="post">
+<?php wp_nonce_field('update-permalink') ?>
 	<p><textarea rows="6" class="large-text readonly" name="rules" id="rules" readonly="readonly"><?php echo wp_specialchars($wp_rewrite->mod_rewrite_rules()); ?></textarea></p>
 </form>
+	<?php endif; ?>
 <?php endif; ?>
 
 </div>
