How can I make a self-signed certificate a trusted root certificate authority?

I've created a self-signed certificate using IIS 7 and assigned it to my local website. It looks like that my connection to my local server is encrypted; but the problem is that certificate indicators in all browsers are red and read the following error:

"The identity of the server you are connected to cannot be fully validated. You are connected to a server using a name only valid within you network, which an external certificate authority has no way to validate ownership of. As some certificate authorities will issue certificates for these names regardless, there is no way to ensure you are connected to the intended website and not a hacker."

What does this error mean? Why doesn't this error get away when I add my certificate in "Trusted Certificate Root Authorities" in mmc>certificates? I wanna get a green indicator for my certificate in my browser! Is it possible?

Thanks in advance.