Why is default.aspx page not opened if i specify http://localhost. I am able to view this page if i hardcode it as http://localhost/default.aspx

If some other default page comes higher in the list, adjust the default.aspx to be the number one entry inside the IIS configuration. If you have multiple websites inside IIS, make sure the configuration is applied on the right website (or on all websites by applying the configuration on the server-level using the properties dialog, configure WWW service).