Well at least we're getting farther now. Please bear with us, of course these issues are the reason this is all still "beta" and why we're offering it all for free...
OK, now... did you make sure to set the "Virtual Path" property of your website to just be "/"? You can get to that property in Visual Studio by clicking the website's root node in Solution Explorer and looking in the properties pane (or hit F4 if your properties pane is not visible)
Also, if the above is set right and it's still not working, try opening Web.config and do a search for the string "enableJSCompression" - and set that to "false"...
Let me know how all that goes...