IIS help - setting up another site in IIS

You didn't post which version of IIS you have, so I will give you a general overview of what needs to happen.

If you want to authenticate people, then you'll need to get an AD group setup with a group of users who will have rights to access the application.  If not, then you'll simply need to follow your NTFS privledge policy and make sure IIS can see the folder.

Then, in IIS, create a new web site.  My recommendation would to use host headers and have a new hostname assigned to the existing IP address in use by IIS.  Tell IIS to use that host name.  Alternatly, you could request a new IP address, put it on the server and then assign it in IIS.  You can modify the host header information by right clicking on the site, then properties.  Look at the advanced button on the web site tab.

Next, tell IIS where this directory is.  Then, goto the properties of the new site and hit the directory security tab.  Click edit for authentication and access control (assuming IIS 6).  Uncheck enable anon access and make sure Integrated Windows authentication is checked.

At this point, you're mostly done.

Other things I'd do is set a new location for the log files.  You don't want your C drive to fill up.  That's bad news.

Secondly, if you want IE to pass the logged in credentials of the user, then you'll need to make sure you either set your host name as a trusted zone (easy) or set the permissions for your version of IE to automagically pass said login credentials.

You shouldn't need to do anything special to ColdFusion other than making sure the user you use (you did change it from system, right?) to log in CF has rights to your web directory.