ljoe:

Your steps were almost right.  Your issue is related to 1. lacking a host header and 2. DNS resolution to reach the intended site.  See the following post in which I described issues very similar to what you are facing: http://www.dotnetnuke.com/Community/ForumsDotNetNuke/tabid/795/forumid/107/threadid/117486/scope/posts/Default.aspx.  Notice the explanation on how the server can identify what site a request is intended for and the relationship of the IP address, the host header, and the port number.  Basically, you don't need to make your life more complicated by using a non-standard port.  If you have a domain already defined you could use something like "newdnnname.yourcurrentdomain.com" to reach your new DNN site.

Also, you should have installed the "Install" version of DNN and not the source.  There is no need to run the source unless you intend to do programming that will modify the core.  This is a common misconception.  The Install package is ready to run.

Go over the link above and post any questions you may have afterward.

Oh yes, the physical directory should just be c:\MyWebsite in your case.

Carlos