Does this error come from your DotNetNuke portal, or from your application?
If it is coming from your application, then it seems that DotNetNuke is interfering with your application. That's where you need to start removing DotNetNuke stuff in your application's web.config file.
I did some additionial reading and saw one comment that the "right" way to do this is by installing your application in a "Virtual Directory" that is mapped inside of your DotNetNuke application, but not physically in it. I know very little about this, but here is a reference:
http://www.iis.net/learn/get-starte...ies-on-iis This seems like a better way to go, and also seems designed for what you are trying to do.