Try to add one entry in your PortalAlias table:
yourPortaleID in PortalID column and your folder name in Portalalias column and leave other columns null.

For example:

INSERT INTO {databaseOwner}{objectQualifier}PortalAlias (PortalID, HTTPAlias) VALUES (0, 'www.yourdnnName.com/theFoldername')


Restart your application after you add the record.

We upgraded our 5.4 install to 5.6 with no issues, running on IIS7 and .NET Framework 3.5.  Before the upgrade I installed .NET Framework 4 and all the necessary web.config entries appear to exist.  When I switch the framework version in IIS to 4 we begin encountering this error immediately, but switching back to 3.5 (by selecting 2.0 in IIS 7) brings us back to operation again.  I have tried the Integrated pipeline as suggested above to no avail, hopefully it helps someone else.

We would really like to be on the 4.0 Framework for module development.

David-

Not sure what you mean...

After I wrote this I thought about seeing if I had problems with DNN 5.5 and DotNET 4, so I restored from a backup and proceeded to re-upgrade.  That is clicking along fine.

Mark