Error:beyond application level. This error can be caused by a virtual directory not being configured as an application in IIS

I inherited this application from a developer who no longer with the company.
After I get latest and run the app, I get the following 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 170:  <location path="winLogin.aspx">
 Line 171:    <system.web>
 Line 172:      <authentication mode="Windows" />
 Line 173:      <authorization>
 Line 174:        <allow users="*" />
 

The error mentions IIS however since this is a VS 2005 project I am using the default web browser.

Any ideas on how to resolve?

---