I have used the extremely handy app_offline.htm trick to shut down/update sites in the past without any issues.
Be sure that you are actually placing the "app_offline.htm" file in the "root" of the website that you have configured within IIS.
Also ensure that the file is named exactly as it should be. "app_offline.htm" (but without the quotes, obviously!).
Other than that, there should be no other changes to IIS that you should need to make since the processing of this file (with this specific name) is handled by the ASP.NET runtime rather than IIS itself (for IIS v6).
Be aware, however, that although placing this file in the root of your site will force the application to "shut down" and display the content of the "app_offline.htm" file itself, any existing requests will still get the real website served up to them. Only new requests will get the app_offline.htm content.
If you're still having issues, try the following links for further info:
Scott Gu's App_Offline.htm
App_Offline.htm and working around the "IE Friendly Errors" feature
Will app_offline.htm stop current requests or just new requests?