Adding new application under Default Web Site

I added a default website, browsing to it worked fine.  Then added a new application, and browsing to it would provide a "Could not load type X".  To prevent this, I added to the main web.config

<location path="." inheritInChildApplications="false">

around <system.web>

Having done this, I still see an error unless I change DefaultAppoPool to Classic pipeline mode.  This nearly works as I need, however the application doesn't seem to be picking up the css file and displays awfully.

Any help much appreciated.

Thanks

James