Asp.net IIS error

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

Steps resulting in above error when running web application

1) Web project was created in another PC and copied to another.
2) Put project in wwwroot directory
3) Using IIS - created an web directory pointing to this project.

Solution:
4) In IIS - should just navigate to the project folder and right click to create an application.