Error using XML Web Part and owssvr.dll

Today we wanted to get data from a SharePoint list and format it using some XSL. After some research I found people that said you could use OWSSVR.DLL and pass it certain parameters to filter the list and return only the data you want. The good thing about OWSSVR.DLL is that it is available at each site level and can pull data from any list and return the data in XML format.

Great! Now all we need to do is style it with XSL.

Not so fast!! The link to OWSSVR.dll is http://servername/sitename/_vti_bin/owssvr.dll. Try putting this into the XML web part and testing the link using the test link link. Good it returns the XML the way we want. Now try saving your XML web part settings and you will notice that you get an error about not being able to access the XML URL.

I did some more research and found that many people were having the same problem with OWSSVR.DLL and XML web parts. A couple of people suggested that it was a permission issue and that you could fix the problem. It appears to me as well to be a permission issue. When the web part tries to access the URL it uses the Web App Pool Id. One user suggested adding the Web App pool id to the IIS_WPG and WSS_WPG domain groups and that this would take care of the issue. I tried this and it did not seem to work. I still received the same error.

We ended up moving to the cSeg web part for rendering the list data. We would like to use OWSSVR.DLL in the future, so if anyone knows of a way to get past the error that the XML web part produces, any solution would be great.