Ok
1. Install a fresh installation off the install package (not the source) http://downloads.sourceforge.net/bugnet/BugNET-0.7.921-Install.zip
2. Read the installation documentation http://www.bugnetproject.com/Documentation/tabid/57/topic/Installation/Default.aspx
3. Make sure your IIS virtual directory is configured as an application and it is running ASP.NET 2.0
4. Make sure that SQL Server 2005 / 2000 service is running
If you still have problems please tell us in detail what you did, how you set things up and what else you have done.
It is normally very easy to get BugNET running.