In IIS administration, both applications and virtual directories serve as organizational structures, but with distinct purposes:

// Physical directory structure example:
C:\inetpub\wwwroot\
    ├── MainApp (Application)
    │   ├── Web.config
    │   ├── Default.aspx
    │   └── SubFolder (Virtual Directory)
    │       └── Page.aspx
    └── SharedContent (Virtual Directory)
        ├── Images
        └── Downloads

Creating these in IIS 6.0 through C# code:

// Create Virtual Directory
DirectoryEntry parent = new DirectoryEntry("IIS://localhost/W3SVC/1/Root");
DirectoryEntry vDir = parent.Children.Add("MyVdir", "IIsWebVirtualDir");
vDir.Properties["Path"].Value = @"C:\SharedResources";
vDir.Properties["AccessRead"].Value = true;
vDir.CommitChanges();

// Convert to Application
vDir.Properties["AppIsolated"].Value = "2"; // Medium pool
vDir.Properties["AppFriendlyName"].Value = "MyApp";
vDir.CommitChanges();

The inheritance behavior differs significantly:

• Applications: Create new configuration boundaries
• Virtual Directories: Inherit parent application's configuration

Example in ASP.NET Web.config:

<location path="MyApp/SubVirtualDir" allowOverride="false">
    <system.web>
        <compilation debug="true" />
    </system.web>
</location>

Application pools handle them differently:

// Checking security programmatically
using (ServerManager serverManager = new ServerManager())
{
    ApplicationPool appPool = serverManager.ApplicationPools["MyAppPool"];
    Console.WriteLine($"Identity: {appPool.ProcessModel.IdentityType}");
    
    Site site = serverManager.Sites["Default Web Site"];
    Console.WriteLine($"Virtual Directory Auth: {site.Applications[0].VirtualDirectories[0].LogonMethod}");
}

Key changes in application/vdir handling:

• IIS 7+: Unified management through ApplicationHost.config
• Simplified conversion between vdirs and apps
• Enhanced isolation options

<application path="/MyApp" applicationPool="AppPool1">
    <virtualDirectory path="/" physicalPath="C:\Apps\Main" />
    <virtualDirectory path="/Shared" physicalPath="\\Network\Shared" />
</application>

In IIS 6.0 era, we only had virtual directories as the primary method to map physical folders to web accessible paths. With modern IIS versions (7.0+), Microsoft introduced the application concept as a more powerful alternative. Let's dissect the technical differences through an ASP.NET lens.

// Typical web.config showing application-level settings
<configuration>
  <system.web>
    <compilation debug="true" targetFramework="4.8" />
    <httpRuntime targetFramework="4.8" />
  </system.web>
</configuration>

An application creates an independent execution context with:

• Separate application pool (unless explicitly shared)
• Unique configuration inheritance chain
• Isolated session state and application variables
• Distinct runtime environment (can run different .NET versions)

A virtual directory simply maps a physical path to a URL namespace:

• Shares parent application's configuration
• No process isolation
• Inherits all runtime settings
• Better for static content or shared binaries

When deploying an ASP.NET MVC sub-project:

// WRONG approach using virtual directory
Physical Path: C:\Apps\AdminPortal
Alias: /admin
(Results in configuration conflicts with parent app)

// CORRECT application approach
Physical Path: C:\Apps\AdminPortal
Alias: /admin
Application Pool: AdminPortalPool
.NET CLR: v4.0

Applications break the web.config inheritance chain. Test this with:

<location path="." inheritInChildApplications="false">
  <system.web>
    <compilation debug="false" />
  </system.web>
</location>

Each application creates:

• Separate app domain (5-10MB overhead)
• Independent JIT compilation
• Distinct memory space for caching

Virtual directories add negligible overhead since they share the parent's resources.

When upgrading legacy setups:

1. Identify virtual directories containing:
   - Unique bin assemblies
   - Custom web.config sections
   - Special authentication requirements
2. Convert these to applications
3. For static content (images, docs), keep as virtual directories

Problem: "Could not load file or assembly" errors after conversion
Solution: Verify <probing privatePath> in child application's config

Problem: Authentication breaks after conversion
Solution: Reconfigure <authentication> section independently