Well. I think I found the answer to my own problem. At least it worked on the localhost. If you are already running a .NET site in your root directory and want to run DNN in a subdir, you need to modify your root sites web.config.  The problem is that the subdir with the DNN web.config is trying to inherit settings from the root web.config.  So in the root dir (not the DNN web.config) you need to modify your web.config by doing the following. Just before the <system.web> add <location path="." inheritInChildApplications="false"> and then add the end tag after the </system.web>. This keeps the DNN web.config from inheriting the root sites web.config. And, just like that, the blank pages will be normal!

So it will look something like this

<location path="." inheritInChildApplications="false">
    <system.web>
          ...............all the settings in this wrapper.....................

    </system.web>

</location>

I was so excited that this worked on localhost.. I thougt all my problems were solved.  But now I've run into other problems that seem related to my host using x64 bit IIS (endless loop problem when running the database install scripts) . Wasted a whole week trying to get this working. Too bad the DNN installer is so weak. Consequentially, I've tried over and over and it will not install correctly. So bummed...!  Severely reduces my confidence in DNN ...