Have you set scripts to execute in the directory via the IIS
management tool (MMC for IIS3, no?)? This sounds like you've
followed all the right steps except setting that directory to
allow scripts to be executed instead of read.
Update: Btw, I don't think the %s %s is in the
registry. It should be associated with the file extension
via IIS (once again using the properties dialog of the
directory via MMC. I think it's even on the same tab as the
set directory to execute scripts dropdown).
ALL HAIL BRAK!!!