I have created an install that creates a website and a virtual directory. If I browse to the page that uses the web service using the virtual directory, the web service call fails. However, if I set the home directory of the website to the same physical directory as the virtual directory, then browse to the page using the home directory of the website, the web services work.
So, for example, if I use the following address the web services fail:
If I assign the home folder of the website to match the target of the virtual directory, it works: