In some cases, you just need multiple websites for development, rather then virtual directories.
Windows 7 handles this just fine, but WindowsXP does not, you have to either create another website via script or code.
OR just download this awesome Dutch software http://www.firstserved.net/help/downloads
Don’t worry about the site not being in English, scroll down to the download link, download and install.
It’s a very simple setup and does exactly what you’d expect, you can create or delete websites in WindowsXP.
After you create a website, it will show up in IIS and you can handle the other setup details there.
And remember, you can only run one website at a time, so make sure to stop any others you may be running before starting your new site.