Your web extensions have nothing to do with this, this is related to Physical and virutal paths. For example say I setup a virutal directory named 'intranet' and create a project with the URL http://localhost/intranet/myapplication/
my file share path should be C:\inetpub\wwwroot\[intranet virtual directory]\myapplication
Essentially you have to make sure that your Physical Path is mapped correctly to the directory that the URL points to.
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