Dotnetnuke needs to be an application, whether it's a website, or a virtual directory off it. If you're trying to run it in a folder that's not an application it will not work. If you download the documentation download you'll find an installation guide that will talk you through the steps.

You can have multiple portals with DNN through a number of ways. DNN supports virtualisation of sites, so you can use one database and one copy of the code but create completely seperate sites. You can do this either through the use of child portals (in the form www.mysite.com/newportalname) or parent portals (www.newportalname). Alternatively, you can use two code bases, but alter the 2 web.config files to use different objectqualifiers, but point to the same database.

Cathal