I hit the "path specified cannot be used at this time. (Exception from HRESULT: 0x80070094)" error while I was trying to setup a simple blank site the other day.  I was banging my head against the wall for about an hour but after searching the web for a bit, I ran across a few solutions but none of them seemed to work, it was a combination of a few. 

Here are the steps that worked for me:

  1. IISRESET on all servers (WFE's and IDX server)
  2. Windows SharePoint Services Timer Service on all servers (WFE's and IDX server)
    • Administration Tools -> Services -> Windows SharePoint Services Timer Service (all the way at the bottom)
  3. Created a new application pool for your new web application in IIS on all servers
    • I used the Default App Pool template
    • Create the application pool with its own AD account
  4. IISRESET on all servers (WFE's and IDX server)
  5. Finally, go into your Central Administration and create a new web application and make sure to select the application pool you created.

Disclaimer
The opinions expressed herein are my own personal opinions and do not represent my employer's view in anyway.

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