I haven't confirmed this yet since I haven't had time, but seeing what the results are (deletion of the /admin directory) I thought I should post something asap. Here is my setup:

1. Folder with DNN files located outside of site structure.
2. Website created in IIS, top level of site pointed at another folder.
3. Virtual directories are created for all sites, these point at DNN.

For instance:

project.company.com -> does not point at DNN.
project.company.com/client1 -> virtual directory pointed at DNN.
project.company.com/client2 -> virtual directory pointed at same DNN.

This works great, we use DNN for a project management tool for each of our clients, one installation total, one database, etc managing multiple sites.

I wanted to create a site I could work out of to do some host settings, so I created a /admin virtual directory. I change all of the sites paths during setup to be /Portals/[Name], in this case /Portals/Admin.

Once I realized I could do the host changes from any site I decided to remove the /Admin portal. I used the admin tool to delete the portal.

All of the sites stopped responding with a Null Reference exception.

After some digging I looked at the DNN root /admin folder, and everything but 2 folders (I assume they were locked at the time), were deleted. Restoring that from installation resolved the problem.

Like I said at the top, I haven't confirmed this yet. It would make sense if I flubbed on /admin creation and told it the root should be /admin and not /Portals/admin (which is possible), but I am usually pretty anal when setting up sites. Even if that was the case it would probably be good to prevent the /admin directory from being deleted.

Sorry if I am posting this to the wrong place.