Net in the Windows Server 2003 and IIS

Hi all, I need your help.

I need config the ASP.Net in the IIS of windows server 2003.

If I use this virtual directory it’s ok and Net working:

If I use this virtual directory Net not working:

And I have this error:

Server Error in '/' Application.
Configuration Error 
Description: An error occurred during the processing of a configuration file required to service this request. Please review the specific error details below and modify your configuration file appropriately. 

Parser Error Message: It is an error to use a section registered as allowDefinition='MachineToApplication' beyond application level.  This error can be caused by a virtual directory not being configured as an application in IIS.

Source Error: 

Line 12:   <customErrors mode="Off" />
Line 13:   <compilation debug="true" defaultLanguage="c#" targetFramework="4.0" />
Line 14: 		<authentication mode="Forms">
Line 15: 			<forms loginUrl="~/Account/Login.aspx" timeout="2880"/>
Line 16: 		</authentication>

Can you help me?
Thanks in advance.

It gets pretty tricky to nest .NET applications. Better bet would be to make the virtual directories siblings rather than parent-child.