I was working on an issue and was getting a 501 not implemented error when trying to use the TRACE verb.  Here is a couple good links that discuss this further.

‘Registry entries that can be added.
http://www.microsoft.com/technet/prodtechnol/WindowsServer2003/Library/IIS/d779ee4e-5cd1-4159-b098-66c10c5a3314.mspx?mfr=true

 ‘Thread on this topic.
http://www.issociate.de/board/post/232980/Disabling_TRACE_verb_on_IIS_6.0.html

Microsoft’s recommendation is not to have this enabled on a production server.
“Do not leave EnableTraceMethod enabled on a production system, as it can reveal back-end server address information to a malicious user.”