Okay here's what I did to resolve my issue.
Since my app files are in a file share the Anonymous user account couldn't access them. This is because by default IUSR account is used for Anoymous user. In IIS->Site->Authentication set Anonymous Authentication to Application Pool Identity if you have created a custom app pool OR you can specify an account.
C:WINDOWSMicrosoft.NETFrameworkv2.0.50727caspol.exe -m -ag 1 -url "file:////computernamesharename*" FullTrust -exclusive on
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