Here's an article off IIS's website with screenshots you could sort of follow:
http://learn.iis.net/page.aspx/461/creating-rewrite-rules-for-the-url-rewrite-module/They have plenty of articles there telling you how to use it and how to create new rules. Technically if you wanted to instead of creating a new application starting point you could modify the match url to look for the sub folder. Something like (.*)/foldername/(.*) or however you want to setup the regular expression.