IIS5 does not serve index.html on local machine even though it is listed in the default docs

I am developing a site in VS2008 on an XP SP3 machine with IIS5. I named the master page in each directory index.html

to avoid the script www.domain.tld/directory/pagename.ext

for specifying the full path, and also because these pages literally contain an index of other pages in their directory.

When I debug my local machine, I get the dreaded Directory List page. I have verified what index.html

is listed in the IIS default docs and I also tried to move it to the first position. Without changes. Uploading the site to a server running IIS7 gives the expected and desired results.

Is the problem because I have an older version of IIS? Is there a difference in how IIS works when running locally and not on a web server? Do I need to change a parameter in web.config? Any thoughts would be appreciated.