This looks like a great web.config file but I am having a little trouble getting this to work for new sub folder sites on IIS 6.
My set up is complicated but in summary is:
Win 2003 > IIS 6 > .NET site running on primary domain > WordPress in root of this domain running under Phalanger within the .NET application pool :)
I can add sites within the Network Admin screen but the web.config above just isn't kicking in to manage these sites - any help much appreciated!
NOTE: I know the above sounds like a crazy set up but it's the only way I could think to get multi site working within the root of the primary domain whilst keeping lots of legacy asp, aspx and html running whilst we slowly replace these!