I just installed VS2013 and turned on IIS 7 on my Windows 7 Ultimate x64 machine. When trying to open a solution I get:
Creation of the virtual direct
The root cause of this error for me was that IIS was installing the config folder on a network shared drive at my workplace. I had to change this to use a local drive and it fixed it.
IIS creates an IISExpress folder in your %USER_HOME%/Documents folder (which for me was a shared drive)
For me this issue was solved by uninstalling IIS, and clearing everything IIS related in the registry. I then had to change my Documents drive in Registry (KHCU\Software\Microsoft\Windows\CurrentVersion\Explorer\Shell Folders) from a shared drive to a local drive (C:\Users[profile]\Documents).
Then reinstall IIS. It should create an IISExpress in the new Documents folder.