SERVER SIDE
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WebDav has to be a separate site with no host header.
1. Open the properties, go to "Web Site"\Advanced\, make sure "Host header value" is empty
2. Go to "HTTP Headers", remove all "Custom HTTP Headers"
3. The root folder will be shared as \.
To add other folders to be shared:
1. Windows Explorer
2. Open the properties of the folder, Web Sharing
3. In "Share on" dropdown list, select the website we created
4. Select "Select this folder", give it an alias
CLIENT SIDE
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1. Go to "My network places"
2. Add an alias