Greeting,
I developed a website using ASP.Net 3.5 and C#. It is working good with Visual Stdio 2010. I uploaded my website to my domain under the public folder.
The key information in this error is this line:
This error can be caused by a virtual directory not being configured as an application in IIS.
In IIS, you can have several applications, but they must be configured as an application. Generally, when you create a web project it maps directly to an IIS application.
Check with your hosting service on how to create an IIS application for your web app.
Edit - added If this is on your server, you can set this up yourself following the instructions in @Frazell Thomas's answer. He beat me to finding that link. To save yourself some reading, you should be able to focus in on the Creating Virtual Directories and Local Web Sites section.