Ran into an interesting question on the ASP.NET newsgroup today regarding a problem I've run into a few times myself. The issue revolves around virtual directory folder inheritance and web.config settings getting inherited from a root Web site.

Anyway - one issue that has come up a few times is that the root site defines an HTTP module. The child virtual (an off the root virtual directory) when created by default inherits that module entry in web.config and usually fails because the module isn't available.