here are the steps I have taken.
I made a directory called "FEC" and gave it read, web, write and webroot permissions (one more thing about unzipping files, do you unzip the module files into folders or just unzip them all into the directory they are in?) My web.config file is updated correctly using your example.

I unziped the main dotnetnuke file to a created directory, PORTAL.  Any zipped files remaining I unzipped to their default directory.  I also left the zipped files in the directory.  It was a belt and suspenders approach.

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Annoying the world, one person at a time. (Group discounts Available)

jspoon,

Exactly.

By installing DNN directly rather than using the value application you will have full access to both all the files and all of the tables, procedures, etc in the SQL database.

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Annoying the world, one person at a time. (Group discounts Available)