enabling web services causes an error

I am installing MDS on a test machine. I create my database, create my application, create my site on port 81 and set my Database. I then check "enable web service for this web application" and after about 1 minute I get a pop up that says "An unexpected error occurred: The network path was not found. ."

Does anyone know what this means? If I try and browse to the web service usinghttp://locahost:81/mds/service/service.svc, I get ther error a 503 error that the service is unavailable