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I encountered a “Specified value is not supported for the parameter” error when trying to create a web application in SharePoint 2010. Tried to create a couple of service applications and met with the same error. This was on my laptop that was part of corporate domain but was not joined to the domain. So, after some error log reviews, I was able to resolve it by joining the Windows 7 laptop to corporate domain before performing these operations.

SharePoint actually checks whether the machine (user account too) is connected to the domain before these actions are completed. This happens to machines that are part of the domain during SharePoint install and configuration.