What is the ASP.NET Machine Account?

What is this new user account for? What created it?

The aspnet_wp or ASP.NET Machine Account is created when the Microsoft .Net Framework 1.1 is installed onto a Windows XP computer. The user is created to run the asp.net worker process used in Microsoft's Internet Information Services, which allows ASP.net to run on your local web server (This is pretty much its only use, it is not used to run normal .net managed executables). There is not a need to worry about this user's presence; it was not created in malicious way. ASP.net is a programming framework built on the common language runtime (Microsoft .net framework) which can be used on a server to build powerful Web applications. For more information on ASP.net see here

Why does it need another User Account?

Another user account is created for the ASP. Net Worker Process (Aspnet_wp.exe) so that it is not running with administrator privileges. This helps to increase security because if there was a breach the worker process is running as a lowly restricted user rather than having administrator privileges on the local machine. The big complaint with there being another user created is that when it is created it will prevent auto logon had there previously only been one user on the computer. This can easily be corrected on the first version of the .Net Framework v1.1 by downloading the following registry file which fixes the problem by adding ASPNET to the special accounts list. To do this manually rather than using my file, go to Start > Run and type in regedit. Then create a new DWORD called ASPNET under HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows NT\CurrentVersion\Winlogon\SpecialAccounts\UserList. There is also another manual method which can correct this issue by having the user specify which account should be used for automatic logon (see here for details). In September 2004 Microsoft released Service Pack 1 for version 1.1 of the .Net Framework, the automatic logon issue was corrected along with further security enhancements, and full support for Windows XP Service Pack 2. To download Service Pack 1 for the framework click here (10.2Mb Download).

Can I delete it?

You can remove this account, but it is vital if you do asp.net development work on your machine.
By removing the account you may find your ASP.net projects will no longer function correctly.

It is possible to recreate the user by issuing the following command from the run dialog (changing the framework version number as appropriate)
%systemroot%\Microsoft.NET\Framework\v1.1.4322\aspnet_regiis.exe /i