I'm trying to allow the IUSR account access to certain folders. Currently when I do this, it gets the little red arrow (as seen in this question) and although I can see it in the list and it appears to be given access, it doesn't work.
What do I need to do to allow IUSR access?
I've got an AD domain and I have admin access so can change anything.
You should change what account runs the app pool to a domain user that has access to the necessary resources.
If you have and AD domain, try creating a service account with a non-expiring password, use that account inside your IIS to run services, and then give that account access to those folders.
This is the more typical pattern in larger networks. The individual computer IUSR accounts are not useful for access resources.
Here is a nice write up and Adobe: