Setup pass through authenication on IIS 7.5

Okay here is the lay of the land as brief as possible but trying to provide as much information as needed to help get to the root of my problem. First let me explain, I am a restarting developer who has been away from the game for over 5 years and this  is my first deployment back my last exposure to IIS was on 5.x now I'm dealing with 7.5 and .net 4.6 so the rules and interface has changed up a bit on me and I may place some things out of context, so feel free to set me straight, I will not be offended I will be appreciative as there seems to be a abhorrent lack of documentation in this age available.

Environment app is going into:
    •Windows Server 2008 R2 Ent 
    •IIS 7.5 .NET 4.6 
    •SQL 2008 (deployed on a remote host on the same network on the same Windows domain) 

The web app going on it:

    Simple client server database front end based in VB on ASP.NET using pass through authentication to communicate with the database that provides the data for the application.

The issue:

When the app website was built and the virtual directory was created for the app everything went smoothly for the publish. upon launch there were some minor issues to cleared up but quickly edit the web.config to show me the errors verbosely and saw that the machine not the current users credentials were being passed to the SQL server and as a result the login was being rejected.

So with a little looking I found where advice had been given to add the following to the 'web config' under <system.web>

<identity impersonate="true"/>

The result of doing that was that I then produced the following error:

    500 - Internal server error.
    
    There is a problem with the resource you are looking for, and it cannot be displayed.
    
So I'm in a bit of a quandary.  This web app works perfectly and I need to get up and running on the server as the project is in high demand to be live and we are behind schedule. It would appear that the pass though authentication issue is the last mile we have to go though but my lack of familiarity with 7.5 IIS is stalling progress. 

Any help would be greatly appreciated! If more information is needed let me know.