Okay, am happy to report that this problem has been SOLVED! You won't believe what the solution was, either.
After spending several nighttime hours, pulling out my hair trying to figure out why I can't seem to resolve this internal server error 500, I finally gave up and decided to call Godaddy support.
Sure enough, they checked everything on their end and couldn't see a reason why this error should be coming up, and the wise tech support guy just off the cuff suggested it may be a caching problem being caused by my browser.
Know what? HE WAS RIGHT. I had been using Internet Explorer to do the installation and for some strange reason, IE was causing the ISE 500 error!
I guess, IE was probably generating or sending some invisible rubbish to the server which it couldn't comprehend, or something else (as only IE can do.)
Nevertheless, on his suggestion, I tried the installation using Google Chrome, and voila! SUCCESS!!
Props to Godaddy support.
So, if you are having any kind of ISE 500 errors in the future, check your browser, if it's IE, that could be your problem.
Why, or why, cant Microsoft conform to the same browser standards everybody else has agreed to?
I shudder to think how many BILLIONS of man hours in IE work arounds, and BILLIONS of dollars this IE browser non conformation has caused the world.