The mystery that is SPWebProvisioningProvider:
Phew... This Blog saved my day!
http://blogs.technet.com/apurdon/archive/2008/02/05/the-mystery-that-is-spwebprovisioningprovider.aspx

SSP or new Site not reachable from IE8 on App Server:

I couldn't understand what was going wrong with new SP site which i created. When I browse with IE8 on App Server it throws a http error 401.1 (You are not authorized to view this page).. Even with local Admin or MOSS Farm admin(same in my case) it was not authenicating users

Finally found this on technet. It says it is to do with one update.

http://social.technet.microsoft.com/Forums/en-US/sharepointadmin/thread/a8ec1c91-c0d2-42ca-a222-35e7f0cecf26



If you are not able to access the site only on the server, then this is probably related to one of the updates which went out recently. I am not sure which one, but I had the same problem and could fix it by making the following registry change:
Click Start, click Run, type regedit, and then click OK.
In Registry Editor, locate and then click the following registry key: HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\Lsa
Right-click Lsa, point to New, and then click DWORD Value.
Type DisableLoopbackCheck, and then press ENTER.
Right-click DisableLoopbackCheck, and then click Modify.
In the Value data box, type 1, and then click OK. Quit Registry Editor, and then restart your computer.

How to Change Application Pool identity of a WSS or MOSS Web Application:
I was getting highlighted message under Administration Task list. It says "Central Administration application pool account should be unique"



In details of It says that "Account of Central Administration is being used by some other web application...."



To resolve this I following following steps:

• In SharePoint Central Administration Web site, click Operations.
• Under Security Configuration, click Service accounts.
• Click the radio button beside Web application pool.
• Select Windows SharePoint Services Web Application.
• Select the application pool where you want to change the identity, for example: Sharepoint - 80.
• Make a note of the existing settings in case you need to unwind your changes.
• Select the Configurable radio button
• Provide the user name and password. It helps to be explicit here and use the domain\account format (e.g. mydomain\SPService). Also be sure to use a strong password. Click OK
• To restart the application pool, either open IIS and recycle the application pool, or open a command prompt and type iisreset -noforce.
• Open your SharePoint site in a browser to confirm that the change was successful.
• This change will be automatically propagated to all web front-ends.

SharePoint: 10 Best Practices For Building SharePoint Solutions :
This is an excellent article for Sharepoint Developers looking to start new project. This published document covers Sharepoint development environment to packaging solution and continuous build for Sharepoint solution using TFS and using WSPBuilder.
Before reading this I didn't knew that one can install WSS on my Vista box. Bamboo Solutions have provided this link which explains how to install WSS on Vista machine and you can continue development on your local machine rather fiddling around improving RAM for your VM.