ASP.net error allowDefinition='MachineToApplication' beyond application level

When I compile my ASP.Net web application(written in C#) I get the error:

Error      27      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.      C:\MYPROC\dir_29.6\MyWebSoln\Web.config      133      

The line number points to the content:
<sessionState timeout="180" mode="InProc" cookieless="false"/>

If I remove the above line, I get the same error for the following line:
<authentication mode="Windows"/>

My application files are like this:
C:\MYPROC\dir_29.6\MyWebSoln\Web.config

I created a Website alias in the IIS manager (WIndows 7), for the physical path: C:\MYPROC\dir_29.6\MyWebSoln and restarted IIS.

I still get the above error. Could you please suggest a workaround? Thank you.