Trying to put a virtual directory under a web site in WinSrv2003, I hit this problem:
Server Error in '/TestSubSite' Application.
Configuration ErrorDescription: 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: Could not load file or assembly 'SControls' or one of its dependencies. The system cannot find the file specified. (D:\web\testsite\web.config line 211)
Source File: D:\web\testsite\web.config Line: 211
Fortunately, the answer is to wrap the system.web element in a location element, with the attributes path="." and inheritInChildApplications="false".
I've documented this fun on stackoverflow.com: