If you have ever deployed an Office InfoPath 2007 form template, you may have come across the following issue in the Publishing Wizard:
Several people have already blogged about this issue and potential resolutions. In the Office SharePoint Server 2007 (Beta 2) days, Firedancer described how you can stop the System Event Notification service. Dave Hunter provided the same advice in this post while also explaining that a site collection must be at the root level of the SharePoint site to which you are publishing. Other posts and forums have offered similar suggestions.
Another possibility, although probably not as common as the aforementioned resolutions, is that URLScan is running on the IIS Web site. URLScan is a security tool that restricts the types of HTTP requests that IIS will process. Settings are stored in URLScan.ini, located in <DRIVE>:WINDOWSsystem32inetsrvurlscan. By default, the OPTIONS verb is included in the DenyVerbs section. If the UseAllowVerbs option is set to 0 (which means URLScan will use the DenyVerbs section instead of the AllowVerbs section), and the OPTIONS verb has not been removed from the DenyVerbs section, then you might encounter the invalid URL issue.
To determine if URLScan is even running on your server, start IIS, right-click Web Sites, and then click Properties. In the Web Sites Properties dialog box, click the ISAPI Filters tab to see if the URLScan filter is loaded.