Creating virtual directories in IIS express

IIS express configuration is managed by applicationhost.config.
You can find it in

Users\<username>\Documents\IISExpress\config folder.

Inside you can find the sites section that hold a section for each IIS Express configured site.

Add (or modify) a site section like this:

<site name="WebSiteWithVirtualDirectory" id="20">
   <application path="https://stackoverflow.com/" applicationPool="Clr4IntegratedAppPool">
     <virtualDirectory path="https://stackoverflow.com/" physicalPath="c:\temp\website1" />
   </application>
   <application path="/OffSiteStuff" applicationPool="Clr4IntegratedAppPool">
     <virtualDirectory path="https://stackoverflow.com/" physicalPath="d:\temp\SubFolderApp" />
   </application>
    <bindings>
      <binding protocol="http" bindingInformation="*:1132:localhost" />
   </bindings>
</site>

Practically you need to add a new application tag in your site for each virtual directory.
You get a lot of flexibility because you can set different configuration for the virtual directory (for example a different .Net Framework version)

EDIT
Thanks to Fevzi Apaydın to point to a more elegant solution.

You can achieve same result by adding one or more virtualDirectory tag to the Application tag:

<site name="WebSiteWithVirtualDirectory" id="20">
   <application path="https://stackoverflow.com/" applicationPool="Clr4IntegratedAppPool">
     <virtualDirectory path="https://stackoverflow.com/" physicalPath="c:\temp\website1" />
     <virtualDirectory path="/OffSiteStuff" physicalPath="d:\temp\SubFolderApp" />
   </application>
    <bindings>
      <binding protocol="http" bindingInformation="*:1132:localhost" />
   </bindings>
</site>

Reference:

• Application tag for a Site
• Virtual Directory tag