What is the difference between a website and a virtual directory?

A web site is used if you want to host different IP addresses or domains from your IIS server.  A virtual directory is just a subfolder under the web site. 

A web site is accessed by typing in the domain name, for example, http://www.marketingpilot.com.  If you have a virtual directory called support, you would access it by typing in: http://www.marketingpilot.com/support .