I have a IIS problem that I think this blog gives me a fix for:
To resolve it, Right Click on the virtual directory - select properties and then click on "Create" next to the "Application" Label and the textbox. It will automatically create the "application" using the virtual directory's name. Now the application can be accessed.
However I don't have access to the IIS GUI. Is there a way to do the same thing by editing the web.config file?
I'm afraid this isn't possible. Configuring a directory as an application, setting up the AppPool, etc is the responsibility of the web server. Typically your web hosting provider will offer a control panel that lets you configure the virtual directories. If not, you'll need to contact them through their support channels to have this done.