What's up all,
  I finally got this straightened out and figured I would post my findings and solution in a simple manner.

The solution is simple, it was just that I was getting mixed up with setting up the second portal, following the instructions for setting up the original portal.

ok, for setting on a second (or what ever number) portal so that it uses a domain name like: www.secondportal.com instead of www.mydnn.com/secondportal

Again, it is very simple (and kinda obvious) if you know a little about IIS, but I couldn't find any doc about it, so I thought that I had to setup all of my portals as virtual directories (based on the install doc).

-Create your second portal, giving the alias of the new domain name www.secondportal.com (after it creates the portal it is going to go to a "404" page because you haven't created the site yet).

-Go into IIS and create a new web site, with the following information from within the Web Site creation wizard:
   -Select either the IP of the dnn install web site or "All Unassigned" and keep port 80 (if that is the port you are running the site through. 
   -Point it to your DNN install directory (if you followed the install directions, you might have named it "website")

-After the site is created, right click it and select properties.
-Within Properties, select the "Web Site" tab.
-Click the "Advance" button next to the IP address or All Unassigned (which ever is selected in the IP Address field)
-Now you are going to have to add the host headers for the new address, but first your are going to have to update the original in the list, so selected it and click edit.  In the "Host Header Value" field, type in the new URL: www.secondportal.com and the click ok.

If you are going to have multiple address going to this site (like just secondportal.com) you need to add that also as host header.  So follow the last step to add more host headers.

After you are doing with that everything should be working ok.

It seem to work for me.  Hopefully this helps out anyone that was stuck on this like I was.

Sorry, Matt I think I am a little confused about your question, but I will take a shot at it with what I think you are asking.

I think you are asking, within IIS, within the new website properties, on the Home Directory Tab, what do I set home directory value to.

If that is it, then here is my answer.

I am not sure if you have set up a second portal with a virtual directory yet, but if you have you do it the same way, but if not, then...

Not sure how you installed DNN, but if you followed the directions from the guide, it says to (if using the "install" zip package) to create a dnn directory and under that create a "website" directory.

Just like how you configured the original portal, point the new website home directory to the SAME "website" directory.  So you don't have to import/migrate anything, since it is pointed to the same place.

How DNN determines which portal to go to is by the "portal aliases".  You have to set those to the URL address that you want the site to be reached by.  You can add multiple ones there.

like:
www.secondportal.com and secondportal.com

They match the "host headers".

If you have your "host headers" set up correctly, then everything should work from there.

Let me know if you have any other questions.

Gary