MVC 3.0 site running on windows server 2003 IIS 6.0 but not running on windows 2008 R2 Server which has IIS 7.0

You are going to need to do some more digging, since a 500 error is a generic "something is broken" error, so we can't learn anything very useful from it. However, I can get you started in the right direction. First, check to be sure MVC3 is installed on the server. Unless you are bin deploying MVC3 (which is possible), you need to install it on the IIS server (it doesn't come standard). While you are doing that, verify that your application pool is using .NET 4.0 (required for MVC3). If you do make any changes, make sure you restart the IIS server and reload the application pool.

If checking these doesn't fix your issue, start simple: put an index.htm file in your website directory to be sure you can load something. If that doesn't work, your IIS configuration is messed up. Next, create a new MVC3 application and deploy it to your directory (move your production files out temporarily - you want to use the same directory so you can be sure that you compare things properly). In your new MVC3 application, don't hook up any data source. Just get it set up with a small set of dummy data loaded from the application itself. Just enough to do typical MVC "stuff" - list data, edit one data item, etc. This will just demonstrate that MVC3 is working properly. Deploy it to your directory. If it doesn't work, you know MVC3 is the issue. If it does work, you know your issue is with your application itself. Look to see if you still have access to your database server from the new server (maybe the firewall is blocking it, etc.) Also, look to see if you are missing any folders or paths that the original application had access to (maybe javascript files, css files, etc.)

If all of that fails, try installing Elmah (use NuGet to find it and install it) on your MVC application. That should show you any unhandled exceptions. You may also need to check the IIS log files to track down other potential issues.