Hi Lars,
Folder sites only work if the main site is in the root, it can run where the root site is directly at localhost but not by localhost/mydomain.
You should create a new web site instead of using Default Web Site if you have other stuff running under Default Web Site.
This article has some notes about how you can create a different web site and setup a hosts record for testing on your dev machine, so you could setup a site that runs locally as http://mycustomname instead of at http://localhost. Of course if you have nothing else running in the default web site on the dev server then you can just use the default web site.
If the dev machine is accessed remotely then you would need the same host file entries on the client machine to resolve to the dev machine ip address or else use a local DNS server to setup local network host names.
Hope it helps,
Joe