Best practice for updating a live website running on IIS

Buy a second webserver, buy a load balancer. Mark 1 server offline, upgrade, bring back online. Mark server 2 offline, upgrade, bring back online.

Reposted as an answer rather than a comment, was having a stupid moment there!

If you can't have downtime, then the best thing is to have another copy of the server running that you can divert users to when you want to update the primary. Then you divert your users back to the primary after the update.

You can use the State Server sitting on another server to ensure that any session state is maintained when they switch from one to the other.

We are currently experimenting with Microsoft's Web Farm Framework, which seems to do this kind of thing very well.

Our setup involves a front end server, a primary and secondary web server, and a separate state server. WFF keeps copies of web apps in sync on both machines and state server ensures that if a user switches servers between requests (or their current server goes offline), that they should not notice the change.

To upgrade the primary, take it out of load-balancing which will divert all of it's requests to the secondary server. Do your upgrade, put it back in to rotation, and then repeat the process with the second server.