ASP.NET Virtual Path Maps To Another Application Which Is Not Allowed
The source of this problem is that when one copies an ASP.NET Web Site to a new folder -- the properties setting associated with the solution "Virtual Path" is set to the folder name and not the root. The solution is to change the Virtual Path setting from the folder name to "/".
This can be found by right click the project and opening the properties dialog: Solution->Properties->Virtual Path-> Change to "/"
This isn't why your error happened but it may be useful to someone researching the problem who ends up here.
If your web app is running as an application within another IIS site (set via the IIS administration tool) and is attempting to reach resources of the other site by means such as HttpResponse.Redirect, make sure the project isn't set to use a separate IIS in Visual Studio. If it is, it may be firing up inside a different IIS than the rest of the site.