ClickOnce Hello World not working

I read some documentation about how to do ClickOnce deployment and now I'm trying to deploy a hello world application.

I have a WPF default application (just an empty window).

This is what I do:

Open project properties.
Open publish wizard.
Select a local server. I created a website using Visual Studio (File/New/WebSite) and then I can select it from the list. I used the one named Test1.

Then select the option that says The application will be available online and offline
Publish
Now I run the ISS Express server and go to http://localhost:6507/publish.htm that look like this:

I hit the publish button and download setup.exe.
But when I start setup.exe I get the following error:

And the log is:

The following properties have been set:
Property: [AdminUser] = true {boolean}
Property: [InstallMode] = HomeSite {string}
Property: [NTProductType] = 1 {int}
Property: [ProcessorArchitecture] = AMD64 {string}
Property: [VersionNT] = 6.2.0 {version}
Running checks for package 'Microsoft .NET Framework 4.5 (x86 and x64)', phase BuildList
Reading value 'Version' of registry key 'HKLM\Software\Microsoft\NET Framework    Setup\NDP\v4\Full'
Read string value '4.5.50938'
Setting value '4.5.50938 {string}' for property 'DotNet45Full_TargetVersion'
The following properties have been set for package 'Microsoft .NET Framework 4.5 (x86 and x64)':
Property: [DotNet45Full_TargetVersion] = 4.5.50938 {string}
Running checks for command 'DotNetFX45\dotNetFx45_Full_x86_x64.exe'
Result of running operator 'ValueEqualTo' on property 'InstallMode' and value 'HomeSite': true
Result of checks for command 'DotNetFX45\dotNetFx45_Full_x86_x64.exe' is 'Bypass'
Running checks for command 'DotNetFX45\dotNetFx45_Full_setup.exe'
Result of running operator 'ValueNotEqualTo' on property 'InstallMode' and value 'HomeSite': false
Result of running operator 'VersionGreaterThanOrEqualTo' on property 'DotNet45Full_TargetVersion' and value '4.5.50709': true
Result of checks for command 'DotNetFX45\dotNetFx45_Full_setup.exe' is 'Bypass'
'Microsoft .NET Framework 4.5 (x86 and x64)' RunCheck result: No Install Needed
Launching Application.
URLDownloadToCacheFile failed with HRESULT '-2146697208'
Error: An error occurred trying to download     `http://agarwaen-pc:6507/WpfApplication1.application`.

I'm stuck with this because its a Hello World example and is not working. I need to deploy a project that is far more complex. Any help will be appreciated. Thanks in advance.

PD: I'm thinking that the reason of the error may be the server that I'm using. I mean that I just point to a project that has the publish page and then right click Show in browser to start the ISS server. Maybe the setup program cannot download the required files because the server isn't serving those.

EDIT: I moved to not Express version of ISS and the setup.exe file now downloads successfully. Now I get another download error when the application is trying to download the remaining files. The message says No connection could be made because the target machine actively refused it

The message is:

PLATFORM VERSION INFO
    Windows             : 6.2.9200.0 (Win32NT)
    Common Language Runtime     : 4.0.30319.18408
    System.Deployment.dll       : 4.0.30319.17929 built by: FX45RTMREL
    clr.dll             : 4.0.30319.18408 built by: FX451RTMGREL
    dfdll.dll           : 4.0.30319.17929 built by: FX45RTMREL
    dfshim.dll          : 4.0.41209.0 (Main.041209-0000)

SOURCES
    Deployment url          : http://agarwaen-pc/WpfApplication1.application
                        Server      : Microsoft-IIS/8.0
    Deployment Provider url     : http://agarwaen-pc:6507/WpfApplication1.application

ERROR SUMMARY
    Below is a summary of the errors, details of these errors are listed later in the log.
    * Activation of http://agarwaen-pc/WpfApplication1.application resulted in exception. Following failure messages were detected:
        + Downloading http://agarwaen-pc:6507/WpfApplication1.application did not succeed.
        + Unable to connect to the remote server
        + No connection could be made because the target machine actively refused it 10.6.53.219:6507

COMPONENT STORE TRANSACTION FAILURE SUMMARY
    No transaction error was detected.

WARNINGS
    There were no warnings during this operation.

OPERATION PROGRESS STATUS
    * [4/25/2014 12:15:27 AM] : Activation of http://agarwaen-pc/WpfApplication1.application has started.

ERROR DETAILS
    Following errors were detected during this operation.
    * [4/25/2014 12:15:33 AM] System.Deployment.Application.DeploymentDownloadException (Unknown subtype)
        - Downloading http://agarwaen-pc:6507/WpfApplication1.application did not succeed.
        - Source: System.Deployment
        - Stack trace:
            at System.Deployment.Application.SystemNetDownloader.DownloadSingleFile(DownloadQueueItem next)
            at System.Deployment.Application.SystemNetDownloader.DownloadAllFiles()
            at System.Deployment.Application.FileDownloader.Download(SubscriptionState subState)
            at System.Deployment.Application.DownloadManager.DownloadManifestAsRawFile(Uri& sourceUri, String targetPath, IDownloadNotification notification, DownloadOptions options, ServerInformation& serverInformation)
            at System.Deployment.Application.DownloadManager.DownloadManifest(Uri& sourceUri, String targetPath, IDownloadNotification notification, DownloadOptions options, ManifestType manifestType, ServerInformation& serverInformation)
            at System.Deployment.Application.DownloadManager.DownloadDeploymentManifestDirect(SubscriptionStore subStore, Uri& sourceUri, TempFile& tempFile, IDownloadNotification notification, DownloadOptions options, ServerInformation& serverInformation)
            at System.Deployment.Application.DownloadManager.FollowDeploymentProviderUri(SubscriptionStore subStore, AssemblyManifest& deployment, Uri& sourceUri, TempFile& tempFile, IDownloadNotification notification, DownloadOptions options)
            at System.Deployment.Application.DownloadManager.DownloadDeploymentManifestBypass(SubscriptionStore subStore, Uri& sourceUri, TempFile& tempFile, SubscriptionState& subState, IDownloadNotification notification, DownloadOptions options)
            at System.Deployment.Application.ApplicationActivator.PerformDeploymentActivation(Uri activationUri, Boolean isShortcut, String textualSubId, String deploymentProviderUrlFromExtension, BrowserSettings browserSettings, String& errorPageUrl)
            at System.Deployment.Application.ApplicationActivator.ActivateDeploymentWorker(Object state)
        --- Inner Exception ---
        System.Net.WebException
        - Unable to connect to the remote server
        - Source: System
        - Stack trace:
            at System.Net.HttpWebRequest.GetResponse()
            at System.Deployment.Application.SystemNetDownloader.DownloadSingleFile(DownloadQueueItem next)
        --- Inner Exception ---
        System.Net.Sockets.SocketException
        - No connection could be made because the target machine actively refused it 10.6.53.219:6507
        - Source: System
        - Stack trace:
            at System.Net.Sockets.Socket.DoConnect(EndPoint endPointSnapshot, SocketAddress socketAddress)
            at System.Net.ServicePoint.ConnectSocketInternal(Boolean connectFailure, Socket s4, Socket s6, Socket& socket, IPAddress& address, ConnectSocketState state, IAsyncResult asyncResult, Exception& exception)

COMPONENT STORE TRANSACTION DETAILS
    No transaction information is available.

This is a general issue with ClickOnce deployment. You CANNOT publish a ClickOnce app to your localhost and download it from there. I think the issue is about some internal Windows DNS/name resolving, which converts localhost to your-pc:1234 - always. I had the same issue a few months ago, as I tried to publish my app to localhost. There's by now no workaround that I found. Locally, you would need to deploy as an offline package. You can use the online deployment (update from http://...) only with a server that is actually online. Nevertheless, you might try to use a UNC path (like \\ServerInNetwork\Deployment\) for testing the update process. The update behavior between UNC and Web is the same.

Another topic that may help you.