500 errors serving static content from ASP .Net Framework 4.5 sites using custom account in app pool

I have a few older ASP .Net Framework (web forms and mvc) sites on an IIS server which run in an app pool which uses a custom AD account. Serving any static files (images, js, css) from the Content folder of the site has always worked fine – but this began failing a few weeks ago. All requests for static content return a 500 error. The dynamic content still runs fine. When I switch the app pool to use the built-in ApplicationPoolIdentity, then the static content is returned fine. I verified that the custom AD account has read access to the static files on file system. There are no messages in the event log and the IIS logs only show the 500 response with no details. As this works fine using the built-in account, I am assuming the static file handler is still installed and running as expected.

Validation for DropDownLists Broken

This is related to a previous question on passing model data to a partial view from two DropDownLists where the user must select department and year in a view. Numerical data is then displayed in a table in the partial view. The view contains the dropdowns and the table headers. The partial view contains the rows with the numerical data. Right now, the validation is broken. Both dropdowns are required. If I submit form with either dropdown not selected, I get this error: