Saurabh,
That you tested that you have IIS functioning correctly? Have you tried just the localhost as the url in your browser and gotten the welcome to iis page?
I am a admin of my whole network and I still use connect as in iis. Did you use the "Test Settings... and get both tests to pass without using the connect as?
Your test of using D:\arcgis-web-appbuilder-1.1\client\stemapp should have FAILED with just the loader screen (blue screen) with white progress bar in middle on going so far. This is because the stemapp site does not have its env.js setup correctly yet. You have to setup an app that has been "Downloaded" as instructed in the steps of my previous post.
As you have yet to get a WAB app properly deployed I would advise that you open WAB using the bat file and create a new app then follow my EXACT steps and see if you can get a site to deploy properly. Lots of people are getting WAB apps deployed on IIS so it has to be something you are doing or something in your deployment environment.