I installed dnn using the "suggested" route, copying the install folder to a location, and creating a virtual directory in IIS to that location (localhost/dnn). It works fine.

I apparently don't understand what I'm doing when I try to add a second portal.  After creatng the portal, I can find no sign of any files created that indicate where the second virtual directory should point in IIS.  I'm working entirely on my localhost (Windows 2003 Standard).  I've deployed three sites to the real world this week, but being unable to create multiple local sites, I've had to repeatedly cannobolize my single local site for development.

Could someone provide a step-by-step guide to what I need to do in Hosts/Portals and IIS to make something that works?

Yes that worked, at least on the second try - Thank you.

If there's anyone as dumb as me:

First portal was "localhost/dnn" and IIS had a virtual directory under "default website" of "dnn => ..../dnn"

Second portal is "localhost/site2" and IIS has a virtual directory of "site2 => .../dnn" (same path for both portals)

Not what I expected.