New Post: CreateVirtualDirectory cannot find the path specified.

I'm trying to help solve a problem for another developer. He has an msi that deployed fine in several environments, but on one server it gets this error:

Target DeployVDirs:
                ...\BizTalkDeploymentFramework.targets(1701,5): error MSB4018: The "CreateVirtualDirectory" task failed unexpectedly.\r
                ...\BizTalkDeploymentFramework.targets(1701,5): error MSB4018: System.Reflection.TargetInvocationException: Exception has been thrown by the target of an invocation. ---> System.IO.DirectoryNotFoundException: The system cannot find the path specified. (Exception from HRESULT: 0x80070003)\r
               

The virtual directory is supposed to go under the Default Web Site.

As far as I can tell, the physical directory is present and in the correct place, and the service account that is doing the scripted deploy has the appropriate rights to it.

This is a production server, so there is a limited amount of testing I can do on it, and the msi doesn't have a problem deploying anywhere else.

Any ideas where to look for the source of this problem?

Thanks