I have tried b2evolution but unfortunately their concept of multiple "domains" is limited to that of subdomains.... I have also seen the WP multi blog system but i'm wondering if there is something better out there that would work w/ IIS also..
I too asked that question myself for weeks, tried a few, finally installed LifeType. Whatever you do and decide, don't waste your time with LifeType. Looks decent, yes, multiple etc. but their templating system sucks, breaks your blog in a hurry, caching cannot be completely turned off, takes up huge space eventually, their support forum is not very forthcoming either. I will go ahead and install bloghoster or something. None of them does 'everything' we want....