converting to 2005

i have converted my app to 2005
only to recieve the following error, (along with various warnings?)

could someone tell me what i have done wrong
the error is in the web config file

<authentication mode="Forms" />

and the error is

It is an error to use a section registered as allowDefinition='MachineToApplication' beyond application level. This error can be caused by a virtual directory not being configured as an application in IIS.

i have went into the iis and removed and created the folder etc.. but to no avail.
:ehh: