asp project not running within MS visual studio 2008

Hi
I am running a project that caused this error. I thougth visual studio does have its own webserver that
I can use and do not need to create a virtual site.
please advise

Thanks

bob


Configuration Error
Description: An error occurred during the processing of a configuration file required to service this request. Please review the specific error details below and modify your configuration file appropriately.

Parser Error Message: It is an error to use a section registered as allowDefinition='MachineToApplication' beyond application level.  This error can be caused by a virtual directory not being configured as an application in IIS.

Source Error:


Line 48:  <!--0-->
Line 49:  <!--1-->
Line 50:  <authentication mode="Forms"/>  .......this what is highlited in red