enforceFIPSPolicy flag in web.config doesn't seem to working for web application

I'm trying to set up a web application to work in an environment where the FIPSAlgorithmPolicy is set to 1 in the Windows registry (specifically, HKLM/SYSTEM/CurrentControlSet/Control/Lsa). When this flag is enabled, any call to the class MD5CryptoServiceProvider will cause an Invalid Operation Exception to be thrown with the following stack trace:

[InvalidOperationException: This implementation is not part of the Windows Platform FIPS validated cryptographic algorithms.]
   System.Security.Cryptography.RijndaelManaged..ctor() +10480142
   System.Web.Configuration.MachineKeySection.ConfigureEncryptionObject() +439
   System.Web.Configuration.MachineKeySection.EnsureConfig() +152
   System.Web.Configuration.MachineKeySection.GetEncodedData(Byte[] buf, Byte[] modifier, Int32 start, Int32& length) +48
   System.Web.UI.ObjectStateFormatter.Serialize(Object stateGraph) +381
   System.Web.UI.Util.SerializeWithAssert(IStateFormatter formatter, Object stateGraph) +59
   System.Web.UI.HiddenFieldPageStatePersister.Save() +89
   System.Web.UI.Page.SaveAllState() +1117
   System.Web.UI.Page.ProcessRequestMain(Boolean includeStagesBeforeAsyncPoint, Boolean includeStagesAfterAsyncPoint) +3864

Based on what I read in this article, you're supposed to be able to add the following to your config file to disable the algorithm check:

<configuration>
    <runtime>
        <enforceFIPSPolicy enabled="false"/>
    </runtime>
</configuration>

This works for me in a test Console application by modifying its app.config. However, it doesn't seem to work when a modify a .NET 2.0 web application's web.config.

What's interesting to me is that even though I'm catching all exceptions when I go instantiate an MD5CryptoServiceProvider in code, it doesn't seem to even make it to that portion of my code. This is the code that's called in my test app:

    protected string printSomething()
    {
        string toPrint = String.Empty;
        try
        {
            MD5CryptoServiceProvider md5 = new MD5CryptoServiceProvider();
            toPrint = "Created algorithm.";
        }
        catch (Exception e)
        {
            toPrint = e.ToString();
        }
        return toPrint;
    }

And this is what I see when I visit the page:

So this brings up a couple of questions:

• Why is IIS throwing a YSOD instead of allowing my app to catch the exception?
• What do I need to do so that my web app is able to use <enforceFIPSPolicy enabled="false"/>?