web.config in a subfolder

I know I need to set a subfolder up as an application in IIS if I want to include a web.config to override some settings of the root application.  I'm getting an error now, the web.config file from the root application has the forms authentication loginURL is ~/login.aspx.  The nested web.config can't find this file because the subfolder is now setup as an application.  How can I get this new application to see the pathed files in the root application?
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