VS Express 2012 for Web : Unable to covert a folder Web Application

I have a project in VS Express 2012 for Web. I am unable to convert an folder under the root folder into a Web Applicatin from within Context menu by right clicking the folder and selection Convert to Web Application. I get a warning and click Yes. But the folder does not show a Globe sign similar to the root folder.

When I View the page in IE using Ctrl +Shift + W, I get following error:

Line 472:   <location path="adminui">
Line 473:       <system.web>
Line 474:           <authentication mode="Forms">
Line 475:               <forms name=".SAFEadmin" loginUrl="adminLogon.aspx"/>
Line 476:           </authentication>

Source File: C:\Users\pvarma\Documents\Visual Studio 2012\Projects\WebSites\SAFEDealerNet\web.config    Line: 474

Rest of the website works file.

What can I do please?