IIS7: disabling HttpModule in subapplication - sites, application and virtual directories
JKG has the right answer for IIS6, but the syntax is a little different in IIS7:
<system.webServer>
<modules>
<remove name="MyModule"/>
</modules>
</system.webServer>
The web.config will always inherit from its parent if it's in the same web application but you can clear the entire thing or remove an item like so:
From the child web.config (clear all or remove an item)
<httpModules>
<clear />
<remove name="MyModule"/>
</httpModules>
From the parent config by using the location tag...
<location inheritInChildApplications="false">
<system.web>
<!-- ... -->
</system.web>
</location>
http://www.jaylee.org/post/2008/03/Prevent-ASPNET-webconfig-inheritance-and-inheritInChildApplications-attribute.aspx