The Create Virtual Directory (IIS 7) action enables you to create a new virtual directory on an existing website.

Path
The path of the virtual directory.
Application Path
The path of the application that the virtual directory will be created in. If the virtual directory is to be created in the root application then use '/'.
Physical Path
The physical path to the file directory where the content for the virtual directory is stored.
Allow Sub-Directory Configuration Files
Determines whether IIS will look for web.config in content directories lower then the current level.