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Actually, I'm not sure if its a web.config question or a problem with my installation.

What needs to be in the web.config file for phalanger to run properly? I have a very minimal web.config and the sample code seems to run perfectly. When I start adding in anything in
<phpNet>
<classLibrary>

I get an error saying
Node cannot be used in configuration file located on virtual path '/test/simplescripts' because it defines application wide configuration.

Any suggestions would be most appreciated!

You have to configure the folder as IIS application.

1. Open Internet Information Server management console from Administrative Tools.
2. Browse to the folder /test/simplescripts.
3. Right click the folder and open its properties.
4. Click "Create application" and then OK.

That's all.