I was wondering if somebody could tell me how to host webhelp through IIS Manager?
For IIS, simply create a website and set up the site as you want (HTTPS, authentication, rights on the file system, etc.) Copy the files to the root folder of your site and you're done. No additional plugins are required. Only if you want to add custom stuf like ASP or PHP will you need to set that up in IIS separately.
(One thing: If your start page isn't index.htm, you'll have to add your start page to IIS as well.)
For more info on IIS, please see: Create a Web Site (IIS 7)
On having followed all these steps, I am met with a page with directory entries, clicking on one such entry opens the desired page.
Does it have anything to do with the way the webhelp is generated or is it plain ISS configuration?
You need some additional configuration (and you may want to disable directory browsing in IIS for security). You need to set up the 'default document': Default Document <defaultDocument> : The Official Microsoft IIS Site
In your help, determine which file should always be opened. This is the file name specified in your SSL output directory and file name settings. Then add that file name to the default document list in IIS.
Appreciate the help!