In the article Before You Create a Network, it says,
The multisite installation process uses different terminology. A sub-domain install creates a domain-based network, even though you might use separate domains, and not subdomains, for your sites. A sub-directory install creates a path-based network, even though it does not use file system directories. If you want to use a sub-domain install, you must install WordPress in the root of your webpath (commonly public_html).
In my case on a Windows Server 2008 R2 with IIS 7.x, the "root" folder for the web site is named "GoodNews" in "C:\inetpub." Within the folder "GoodNews" and at the first level are all the WordPress folders. So am I in compliance with the above requirement?