I am running SharePoint Foundation 2010. In my testing environment I've got 1 app server and 1 WFE. When I create a new web application, it is creating entries in both the APP and WFE IIS. Is this correct? I was wondering if The IIS entries need to be created on both servers?

Do I need to stop the Microsoft SharePoint Foundation Web Application service on the APP Server(s)?

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You don't necessarily need to stop it unless you want SharePoint not to treat it like a WFE. It is that service (Microsoft SharePoint Foundation Web Application service) being enabled on the APP server that is causing SharePoint to propagate your new web application settings to IIS on the APP server though.

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