I finally found the fix to this problem, solution posted here:

Error 500.13 (Server too busy) with many sites on one machine : The Official Microsoft IIS Site

bump... still have not found any solution to this problem... any help would be greatly appreciated!

More info I forgot to mention:

NONE of the sites that are having problems are built or rebuilt by my scripts, only the group of sites that is not having problems gets built or rebuilt in this manner. The ones that are having problems I set up by hand using the IIS snap-in and I manually set them each up with their own app pools, yet they all seem to fail at the same time.

Also this event continues to happen even during...

I am running a windows 2003 server with close to 150 websites. The majority of the sites, which are all running the same very complex classic ASP portal application using ASPImage/ASPMail/ASPUpload, are receiving the vast majority of the traffic and all are working fine. However all of my smaller websites that do not use this application or any of those 3rd party COM DLL's, and only get a tiny bit of traffic across just a few simple ASP scripts,...