In a case I worked on, the page was displaying "The page cannot be displayed because an internal server error has occured" error if the user accesses the root folder of the application. There were no issues if they enter the full path.
Failed Request Tracing log:
“Either a required impersonation level was not provided, or the provided impersonation level is invalid (0x80070542)”
This error occurs if the service account doesn’t have “Impersonate a client after authentication” Permission.
Follow to steps below to solve this issue:
Go to Start > Settings > Control Panel > Administrative Tools > Local Security Policies
Expand Local Policies and select User Rights Assignment
In the right pane, double-click Impersonate a client after authentication
In the Security Policy Setting dialog box, click Add User or Group
In the Select Users, Computers or Groups dialog box, type IIS_IUSRS
Select Check Names and verify that the name is correct