smooth streaming problem

I uploaded some sample videos to test smooth streaming unders /Big%20Buck%20Bunny%20H.264%20720p/. Then I modified the clinet code to point to my uploaded videos as:

<form id="form1" runat="server" style="height:100%">
<div id="silverlightControlHost">
<object data="data:application/x-silverlight-2," type="application/x-silverlight-2" width="100%" height="100%">
<param name="source" value="SmoothStreamingPlayer.xap"/>
<param name="onError" value="onSilverlightError" />
<param name="background" value="white" />
<param name="minRuntimeVersion" value="4.0.50401.0" />
<param name="autoUpgrade" value="true" />
<param name="InitParams" value="selectedcaptionstream=textstream_eng,mediaurl=http://dan1.mydomain/Big%20Buck%20Bunny%20H.264%20720p/BigBuckBunny.ism/manifest" />
<a href="http://go.microsoft.com/fwlink/?LinkID=149156&v=4.0.50401.0" style="text-decoration:none">
<img src="http://go.microsoft.com/fwlink/?LinkId=161376" alt="Get Microsoft Silverlight" style="border-style:none"/>
</a>
</object><iframe id="_sl_historyFrame" style="visibility:hidden;height:0px;width:0px;border:0px"></iframe></div>
</form>

SmoothStreamingPlayer.xap file is on the server and everything looks fine. When I try to open my client file in a browser it loads silverlight client but no content is shown. Changing the mediaurl to http://streams.smooth.vertigo.com/ solve the issue and I can see the content getting played on my browser.

If I access the manifest file http://dan1.mydomain/Big Buck Bunny H.264 720p/BigBuckBunny.ism/manifest with a browser it asks me to save this file and the file is exactly the same BigBuckBunny.ism file without any modification.

I am wondering if I have to do something to enable this feature on my account so IIS 7 can properly translate my manifest file and send it to the silverlight client.